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Analysis: IRA’s Impact on US Emissions and Energy

The Inflation Reduction Act, the landmark climate legislation passed in the United States in 2022, is bigger and more far-reaching than you think. All in a good way! Here's a quick summary.

Sun rising behind a mountain

In the most extensive analysis to date, researchers ran nine different models to estimate the IRA’s impacts on the U.S. energy system and economy. That's because the IRA is so big and complex that its effects on the energy system and economy can’t simply be totted up but instead must be analyzed using powerful computer models.

Here's a summary of the results recently published in the journal Science.

By 2035, overall emissions of the U.S. economy are likely to be 43 to 48 percent lower than they were in 2005. Without the IRA, emissions would be 27 to 35 percent below 2005 levels. In short, the green transition is already happening, but the IRA speeds it along.

The models show that on average, nearly two-thirds of the emissions reductions come from the power sector. Electricity emissions will fall to an average of 68 percent below 2005 levels in 2030, and 87 percent below by 2035. Without the IRA, power sector emissions would fall by only about half by 2035.

On average, the models indicate that solar and wind generating capacity will grow by 58 gigawatts per year from 2021 through 2035 - more than twice the growth rate without the legislation.

The IRA will also reduce transportation-related emissions by encouraging adoption of electric vehicles (EVs). The models predict on average that EVs will make up 41 percent of all cars and light trucks sold in 2030, compared to 31 percent in the scenario without the IRA and way up from 7% of all sales in 2022.

The reduction in fossil fuel use means that American households and businesses will spend more on electricity, but less on energy overall.

Whilst this is all very positive, it does come with a caveat. “Although IRA accelerates decarbonization, including beyond 2030, no models indicate that the 2030 U.S. climate target would be met with IRA alone,” the researchers write - an indication of just how much work remains to be done.


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