In late July, US Senate Majority Leader Chuck Schumer and Senator Joe Manchin announced that they had reached an agreement on legislation that will address climate change, energy, and healthcare as part of a larger bill aimed at combatting inflation. That bill—the Inflation Reduction Act of 2022—was passed by Congress on August 12 and President Joe Biden signed it into law on August 16.
The bill’s supporters and many climate change researchers believe these provisions could have major implications in the fight against climate change by eliminating 4 billion tons of greenhouse gas emissions. Let’s take a look at the climate provisions of the Inflation Reduction Act and the reaction of the scientific community.
How Much Could Greenhouse Gas Emissions Be Reduced?
Democratic senators originally estimated that by the year 2030, the Inflation Reduction Act could reduce emissions by 40% below 2005 levels. Among others, researchers at the Princeton University REPEAT Project, the research firm Rhodium Group, and the think tank Energy Innovation have analyzed the potential implications of the legislation, using comprehensive climate models.
The researchers from these organizations focused on whether this bill could help the U.S. get closer to its emission reduction goals. President Joe Biden set a goal to cut the nation’s emissions by 50% by the year 2030. According to the analysis by these researchers, policies in place prior to the Inflation Reduction Act have the country on track to reduce emissions by 24-35%, depending on the source of the estimate.
In contrast, the REPEAT Project posits that the $370 billion earmarked for climate spending in the Inflation Reduction Act could reduce U.S. emissions by approximately 42% below 2005 levels by 2030—the equivalent of 3.8 billion metric tons of carbon dioxide. Other climate models yielded similar estimates. Energy Innovation suggested that the Act could cut emissions by 37-41% of 2005 levels, while the Rhodium Group’s estimate was 31-44% off the same baseline year.
How Exactly Will Emissions be Reduced?
According to the REPEAT Project, the Act provides roughly 66% of the needed emissions reductions to achieve Biden’s stated goal of a 50% cut in U.S. emissions by 2030, using 2005 as the baseline. The REPEAT Project arrived at the following estimates for emissions reductions in specific sectors:
- Power – 24%
- Transportation – 19%
- Industry – 9%
- Buildings and Non-CO2 greenhouse gases – 8%
- Land Carbon Sinks – 6%
REPEAT Project researchers concluded that the Inflation Reduction Act will reduce US emissions mainly through an acceleration of the production and distribution of clean electricity and vehicles.
An emphasis on wind and solar power will be a major factor in this process, as the REPEAT Project estimates an average of 39 gigawatts of new wind and 49 gigawatts of new solar power each year, beginning in 2024 and steadily increasing towards the end of the decade.
While these provisions may bring the U.S. much closer to the goals of the current administration, the Inflation Reduction Act still doesn’t push the U.S. over that line. Further cuts are needed if Biden’s target is to be met.
The Role of Carbon Capture in the Inflation Reduction Act
The Inflation Reduction Act’s climate provisions also rely on incentives promoting the use of a technology that captures carbon dioxide, which is then either reused or stored underground. While carbon capture is promising, the field has not yet been embraced due to high costs and major logistical challenges.
The new legislation could address these challenges through a major change in tax credits for the carbon capture industry. The government subsidy for this technology has increased from $50 to $85 per metric ton, which could make many carbon capture projects more economically feasible.
According to the REPEAT Project, these changes could lead to a 13-fold increase in carbon capture use by the year 2030. The carbon capture incentives of the Inflation Reduction Act could make the technology economically viable for many of the industries with the highest emissions, such as coal, natural gas, steel, and cement plants.
According to Princeton estimates, a total of 200 million tons of carbon dioxide could be captured per year by the end of the current decade.
Emissions Reductions Expected to Outweigh Added Emissions
All three climate models agree that the Inflation Reduction Act will do more to mitigate the climate crisis than it will do to exacerbate the problem. Some environmental activists have criticized the Act due to its approval of new oil and gas drilling, but it is still expected to reduce climate emissions overall.
According to Energy Innovations, the climate sections of the Act will cut emissions by 870 to 1,150 million metric tons of carbon dioxide equivalent by 2030. On the other side of the coin, the provisions regarding oil and gas production could increase emissions by up to 50 million metric tons. Based on these estimates, the policies in the Act will eliminate 24 tons of emissions for every one ton of emissions that it adds.
Of course, the devil is in the details, and much is still uncertain. For example, the funding must be allocated efficiently. Because many of the Act’s provisions are economic incentives, the market will play a big role in determining the Act’s ultimate effectiveness in reducing emissions. It is a huge step forward for the U.S. on the road to decarbonization, but by no means a “silver climate bullet” for the world’s largest emitter of greenhouse gases.