US climate law 'provides benefits far outweighing costs' as Trump repeal threat looms: study
Report commissioned by American Clean Power Association estimates Inflation Reduction Act will grow US economy $1.9trn by 2035
The landmark US climate law will spur $3.8trn in net spending across the national economy by 2035, creating a 400% return on taxpayer investment when considering both economic and emissions benefits, according to a new report commissioned by American Clean Power Association (ACP), a national trade group.
Modeling by ICF, a Virginia-based consultancy that wrote it, projects the estimated $746bn in tax credits available through Inflation Reduction Act (IRA) over the next decade will grow the economy by nearly $1.9trn, spur $2trn of capital investment, incentivise an additional 328GW in clean energy capacity, and create an average 1.2 million jobs a year.
Capex investments include more than $400bn in the power sector, over $500bn in buildings, and exceeding $800bn in transportation.
“With energy demand skyrocketing, the American energy industry must rise together to provide electricity that is affordable, reliable, and clean,” he added. “Simply put, consistent federal policy is essential to American power.”
The 119th Congress convenes on 3 January. President-elect Donald Trump, who takes office on 20 January for a second and final four-year term, has called IRA the “greatest scam in history.”
In contrast, outgoing President Joe Biden believes IRA, which also includes funding for other purposes such as lower prescription drug prices, to be his singular legislative achievement.
ICF’s $746bn valuation for the tax credits in those six areas alone is double the Biden administration’s $369bn estimate as he lobbied Congress to pass the law. Even the ICF calculation pares in comparison to a $1.2trn estimate by Goldman Sachs and more than $2trn by energy analytical firm Wood Mackenzie.
Among other findings, the study found that IRA tax incentives by 2035 will lead to a 1.2TW clean energy generation fleet versus 392GW on 31 August, and spur growth in new technologies to enable conversion of fossil generation with carbon capture and storage capacity to over 47GW.
They will also foment more than 26 million new electric vehicles, growing the national fleet to 70 million, versus 3.3 million on 1 January this year.
Overall power system costs under IRA will decline by almost 11% in 2035 compared to a baseline case without IRA, according to the report. Investments resulting from the law will add $846bn to household income.
For climate, the tax incentives will induce energy transition activities and investments that will eliminate 4.1 billion tons of CO2, bringing over $1trn in emissions benefits.
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