What were the climate policies in the IRA, and what will happen to them after the 2024 election?

Transcript

What is the IRA and how will it affect US greenhouse gas emissions?

The Inflation Reduction Act, or IRA, is one of President Biden’s signature pieces of legislation. It was a big bill, with provisions on health care costs, drug pricing, and tax enforcement. Perhaps most notably, the law included the most significant steps to address climate change that the federal government has ever taken. It includes large tax credits and rebates for households investing in clean energy and electric vehicles, major investments in national clean energy infrastructure, and some taxes for producers of fossil fuels.

All together, the climate provisions of the IRA will reduce emissions by up to an additional 11% below 2005 levels as compared to the business-as-usual scenario. This the leads to a total expected emissions reduction of 35% to 40% below 2005 levels. That’s a big deal. But that change won’t come cheap: estimates of total cost are around $1 trillion over 10 years. At a macro level, there is ongoing debate on whether and to what degree the impact on the deficit will be offset by other aspects of the IRA, including raising the minimum tax on corporate profits and crackdowns on tax evasion.

What does the IRA mean for US households?

It’s important to remember that the North Star here is addressing climate change, and that reducing greenhouse gas emissions will benefit the entire world, not just those of us in the U.S. And it’s important that we think about how what we do in the U.S. impacts the fight against climate change everywhere. That said, there are certainly direct benefits of the IRA for U.S. households. For example, the law includes up to $7,500 in tax credits for the purchase of new electric vehicles, a 30% tax credit for installing solar panels on a home, and $14,000 in rebates for upgrading to energy efficient home appliances. U.S. households will also benefit from the tax credits for renewable electricity, which are projected to reduce electricity bills over time.

In addition, this injection into the green economy is creating jobs in the U.S., with obvious benefits for those workers and their families.

How does the IRA factor into the election?

While polling suggests that the IRA has enjoyed broad popularity, some of the climate change proposals are less popular among Republican lawmakers. The Trump campaign has signaled that it would seek to end the tax credits promoting electric vehicle purchases, and some experts have suggested that a Trump administration could also reduce credits for clean energy production. Indeed, House Republicans have already introduced over 20 bills attacking parts of the IRA. Then again, 18 House Republicans recently sent a letter encouraging their colleagues not to repeal the IRA, so a lot remains to be seen about what will happen after the November elections.

Vice President Harris was the tie-breaking vote on the IRA, and she has been a strong environmental advocate in the past. Although she hasn’t yet announced an official climate policy plan, as the new Democratic candidate, we can expect that she would protect the IRA and, depending on the outcome of Congressional elections, find ways to expand on it.