cover image: How Big is the “Biggest Climate Spending Bill Ever?” Key Factors Influencing the Inflation Reduction Act’s Clean Energy Impacts

20.500.12592/5hjx66e

How Big is the “Biggest Climate Spending Bill Ever?” Key Factors Influencing the Inflation Reduction Act’s Clean Energy Impacts

25 Oct 2024

The Inflation Reduction Act could deliver more than $1 trillion in tax expenditures and outlays targeting clean energy deployment, but considerable uncertainty characterizes the economic, emissions, energy, and fiscal implications of the law. I review the features of the political system governing implementation, the regulatory system overlaying performance standards, the innovation responding to IRA incentives, and the energy networks in which IRA-supported investments operate to identify the key factors influencing IRA’s outcomes. Drawing from past research and policy experience, I illustrate how these factors could play out and how future program evaluation could reduce uncertainty and inform better climate policy.
energy taxation public economics environment and energy economics environmental and resource economics

Authors

Joseph E. Aldy

Acknowledgements & Disclosure
This paper is under preparation for the March 2025 National Tax Journal Forum “Tax and Environmental Policy.” Natalie Baker provided phenomenal research assistance. Aldy acknowledges financial support from the Belfer Center for Science and International Affairs, bp, and the Roy Family Fund. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.
DOI
https://doi.org/10.3386/w33092
Pages
31
Published in
United States of America

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