The Inflation Reduction Act (IRA), a now fully supported Democratic bill that addresses climate change and contains wind and solar spending, is expected to be introduced tomorrow in the US Senate. Here’s what its potential impact is, should it become law.
Princeton University yesterday released a Rapid Energy Policy Evaluation and Analysis Toolkit (REPEAT) in collaboration with Dartmouth College, Evolved Energy Research, and Carbon Impact Consulting that outlines what effects the IRA might have.
The Act would nearly double investment in wind power and solar PV to $321 billion in 2030, versus $177 billion under current policy.
Further, according to REPEAT, it could spur record-setting US wind and solar growth, with annual additions increasing from 15 gigawatts (GW) of wind and 10 GW of utility-scale solar PV in 2020 to an average of 39 GW per year of wind additions in 2025-26 – more than two times the 2020 pace – and 49 GW per year of solar – more than five times the 2020 pace – with solar growth rates increasing thereafter.
Further, REPEAT reports that the IRA would lower annual US energy expenditures by at least 4% in 2030, a savings of nearly $50 billion dollars per year for households, businesses, and industry. That translates into hundreds of dollars in annual energy cost savings for US households.
Tax credits, rebates, and federal investments in the IRA would shift costs from energy bills to the progressive federal tax base. For example, it provides a long-term extension for the US solar investment tax credit at 30% and $30 billion in production tax credits for clean energy and battery storage manufacturing.
As for its impact on fossil fuels, the report notes:
These savings do not include the additional downward pressure the Act will put on prices for oil and natural gas by driving lower consumption of these commodities, which will further reduce US energy costs.
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