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ONE YEAR IN, THE INFLATION REDUCTION ACT IS WORKING — KIND OF


THE CLIMATE LAW IS LOWERING THE COST OF SOLAR AND WIND, BUT PARIS AGREEMENT
GOALS ARE STILL OUT OF REACH.

Wind turbines and solar panels in Kahuku, Hawaii. AP Photo / Caleb Jones
Zoya Teirstein Staff Writer
Published Jul 20, 2023
Topic Climate + Politics
Share/Republish Email Twitter Facebook Republish

It’s been nearly a year since Democratic lawmakers pushed the first new climate
spending legislation in more than a decade over 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 to distribute it. 

The Biden administration said the bill will help deliver on the president’s
pledge to cut the United States’ emissions in half by 2030, and independent
analyses estimated that it would help slash domestic emissions by 43 to 48
percent below 2005 levels by 2035. Now, researchers have made an updated
prediction. The Rhodium Group, an independent analytics firm that tracks
greenhouse gas emissions produced by the U.S. economy, published a report on
Thursday that shows just how much climate progress the IRA will usher in — and
where the legislation will fall flat. 

“Nearly one year after it passed, the IRA’s effects are coming into clearer
focus,” a spokesperson for Rhodium Group said. 

The report, the ninth edition of Rhodium’s annual 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 drive emissions down between
29 and 42 percent in 2030, compared to 2005 levels. By 2035, greenhouse gas
emissions will decrease between 32 and 51 percent. Prior to the IRA’s passage,
the nation was on track to cut emissions by 26 to 41 percent by 2035, according
to Rhodium’s estimate from 2022. Rhodium called the overall reductions “a
meaningful departure from previous years’ expectations for the U.S. emissions
trajectory.” 

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Thanks to the IRA’s subsidies, solar and wind energy are already becoming a lot
cheaper: solar by nearly 40 percent and wind by 55 percent. The legislation will
also influence the speed with which electric vehicles replace gas-powered cars.
In 2035, electric vehicles will comprise between one-third and two-thirds of all
passenger car sales, the report said. That’s meaningful progress, but the
emissions reductions aren’t steep enough to get the U.S. fully on track to meet
its pledge to reduce emissions 50 to 52 percent by 2030 under the Paris
Agreement, the 2015 international treaty on climate change 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 replace oil, coal, and gas, including how the
industrial sector behaves and whether states continue to pass ambitious climate
policies.  

And because the IRA revolves around incentives for clean energy, rather than
penalties for fossil fuel use, some of the factors impacting the speed with
which the economy decarbonizes won’t be influenced by the federal legislation. 

For example, Rhodium projects that natural gas, which made up roughly 36 percent
of the nation’s power mix in 2022, will comprise 6 to 29 percent of the power
supply by 2035, depending on whether utilities take advantage of the incentives
in the bill and what types of renewable energies are feasible in their markets.
Natural gas, a cheap source of energy, surpassed coal as the nation’s leading
source of electricity in 2016. Despite the incentives in the IRA, gas is still
abundant, affordable, and here to stay for the foreseeable future. 

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In New York City, a city that has positioned itself as a leader in the green
transition and has vowed to reduce fossil fuel use 80 percent by 2050,
environmental activists successfully lobbied for the closure of the nearby
Indian Point nuclear plant, which prompted the city to temporarily rely on
natural gas-powered plants as it works to build infrastructure that can funnel
hydropower from Canada to Queens. 

Over the course of the next decade, policymakers, regulators, and utility
executives will weigh similar trade-offs between cost, climate impact, and
public opinion across the country, and they won’t all choose the same path. That
will result in a patchy network of green and dirty electricity. The ranges
presented in the new Rhodium report account for that patchiness. 

But they also show that the IRA is making a difference. “Though there’s
uncertainty on just how fast the U.S. scales up renewable energy on the grid or
EVs on the road, those levels of deployment would be meaningfully lower than
what we’re estimating in our modeling under otherwise the same conditions absent
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 laws, including legislation directed at
hastening the permitting process for new large-scale renewable energy projects,
beefing up the green energy workforce, and resolving kinks in the supply chain
that are hamstringing green technology deployment. That has become harder to do
since Republicans retook control of the House of Representatives in January. 

The goals of the Paris Agreement are still within reach, the report reads, “but
getting there won’t be easy.”

--------------------------------------------------------------------------------

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