Emissions and Energy Impacts of the Inflation Reduction Act

TL;DR

This paper assesses the potential impact of the US Inflation Reduction Act of 2022 on emissions and energy systems, using multiple models to estimate significant reductions in emissions by 2035.

Contribution

It provides a comprehensive modeling analysis of IRA's provisions, quantifying expected emissions reductions and energy impacts using nine independent models.

Findings

Emissions could decrease by 43-48% below 2005 levels by 2035.

The IRA promotes clean energy, electrification, and environmental justice.

Model results highlight the policy's potential to significantly reduce US emissions.

Abstract

If goals set under the Paris Agreement are met, the world may hold warming well below 2 C; however, parties are not on track to deliver these commitments, increasing focus on policy implementation to close the gap between ambition and action. Recently, the US government passed its most prominent piece of climate legislation to date, the Inflation Reduction Act of 2022 (IRA), designed to invest in a wide range of programs that, among other provisions, incentivize clean energy and carbon management, encourage electrification and efficiency measures, reduce methane emissions, promote domestic supply chains, and address environmental justice concerns. IRA's scope and complexity make modeling important to understand impacts on emissions and energy systems. We leverage results from nine independent, state-of-the-art models to examine potential implications of key IRA provisions, showing economy wide emissions reductions between 43-48% below 2005 by 2035.