It’s been nearly a year since Democratic lawmakers pushed the first new climate spending legislation in more than a decade to the Congressional finish line. The Inflation Reduction Act of 2022, or IRA, includes $369 billion in clean energy tax credits and funding for climate and energy programs, money that is already trickling into the economy as federal agencies begin doling it out.
The Biden administration said the bill would help deliver on the president’s pledge to halve U.S. emissions by 2030, and independent analyzes estimated that this would help reduce national emissions by 43-48% below 2005 levels by 2035. Now the researchers have made an updated forecast. The Rhodium Group, an independent analytics firm that tracks greenhouse gas emissions produced by the U.S. economy, published a report On Thursday, it shows just how far the IRA will usher in climate progress – and where the legislation will fall flat.
“Nearly a year after its passage, the effects of the IRA are becoming clearer,” said a Rhodium Group spokesperson.
The report, the ninth edition of the annual Rhodium Emissions Assessment, found that the IRA and state-level climate bills that have been signed into law by governors across the country in recent years will reduce emissions by 29 to 42 percent by 2030, compared to 2005 levels. By 2035, greenhouse gas emissions will decline by 32 to 51 percent. Prior to the passage of the IRA, the country was on track to reduce emissions by 26-41% by 2035, according to Rhodium’s estimate from 2022. Rhodium called the overall reductions a “significant deviation from previous years’ expectations for the trajectory of US emissions”.
Thanks to the IRA grants, solar and wind energy are already becoming much cheaper: solar by almost 40% and wind by 55%. Legislation will also influence how quickly electric vehicles replace gasoline-powered cars. By 2035, electric vehicles will account for between one-third and two-thirds of all passenger car sales, according to the report. That’s significant progress, but the emissions reductions aren’t big enough to put the United States fully on track to meet its commitment to cut emissions by 50-52 percent by 2030 under the Paris Agreement, the 2015 international climate change treaty that aims to keep global warming below 1.5 degrees Celsius (2.7 degrees Fahrenheit).
That’s because federal policy levers are only one piece of the decarbonization puzzle. A number of other factors could influence the speed and extent to which renewable energy technologies will replace oil, coal and gas, including the behavior of the industrial sector and whether states pursue ambitious climate policies.
And because the IRA is built around clean energy incentives, rather than penalties for using fossil fuels, some of the factors that affect how quickly the economy decarbonizes will not be influenced by federal legislation.
For example, Rhodium predicts that natural gas, which accounted for about 36% of the country’s energy mix in 2022, will account for 6-29% of the electricity supply by 2035, depending on whether or not utilities take advantage of bill incentives and what types of renewables are feasible in their markets. Natural gas, a cheap source of energy, overtook coal as the country’s main source of electricity in 2016. Despite IRA incentives, gas is still plentiful, affordable and here to stay for the foreseeable future.
In New York, a city that has positioned itself as a leader in the green transition and is committed to reducing the use of fossil fuels 80% by 2050environmental activists successfully lobbied for the closure of the nearby Indian Point nuclear power plant, prompting the city to temporarily rely on natural gas plants as it works to build infrastructure capable of channeling hydroelectricity from Canada to Queens.
Over the next decade, policymakers, regulators, and utility leaders will weigh similar trade-offs between cost, climate impact, and public opinion across the country, and they won’t all choose the same path. This will result in an uneven network of green and dirty electricity. The ranges presented in the new Rhodium report explain this inequality.
But they also show that the IRA is making a difference. “While there is uncertainty about the rate at which the United States is increasing renewables on the grid or electric vehicles on the road, these levels of deployment would be significantly lower than what we estimate in our modeling under the same conditions without the IRA,” Ben King, lead author of the report, told Grist.
In order to continue making progress on climate change, Congress will likely need to pass additional climate legislation, including legislation to expedite the permitting process for new large-scale renewable energy projects, build the green energy workforce, and address supply chain issues that impede the deployment of green technologies. That has become harder to do since Republicans regained control of the House of Representatives in January.
The goals of the Paris Agreement are still within reach, the report says, “but getting there will not be easy.”