A Turning Point for US Climate Progress: Assessing the Climate and Clean Energy Provisions in the Inflation Reduction Act

On August 12th, the US House of Representatives passed the Inflation Reduction Act (IRA) after the Senate did the same five days before. The climate change and clean energy investments are the single largest component in the package, out of the many issues that the IRA addresses. When President Biden signs it, the IRA will be the single largest action ever taken by Congress and the US government to combat climate change. In this report, we provide a detailed assessment of the key energy and greenhouse gas (GHG) emissions impacts of this historic legislation. The IRA is a game changer for US decarbonization. We find that the package as a whole drives US net GHG emissions down to 32-42% below 2005 levels in 2030, compared to 24-35% without it. The long-term, robust incentives and programs provide a decade of policy certainty for the clean energy industry to scale up across all corners of the US energy system to levels that the US has never seen before. The IRA also targets incentives toward emerging clean technologies that have seen little support to date. These incentives help reduce the green premium on clean fuels, clean hydrogen, carbon capture, direct air capture, and other technologies, potentially creating the market conditions to expand these nascent industries to the level needed to maintain momentum on decarbonization into the 2030s and beyond.