The Rhodium Group analysis of the Senate IRA (Inflation Reduction Act) Climate Bill

By Dr Beck

I urge everyone to read the Rhodium Group analysis of the Senate Climate IRA Bill. Like all legislation on Climate coming through the US Congress, it is a compromise bill. Not a Green Party solution. But a solution that avoids war, none the less. I present here a condensed form for lunchtime reading.

From the Rhodium Group report:

(1) “The array of clean energy tax credits has the greatest impact on emissions. Long-term, full value, flexible clean energy tax credits for new clean generation and retention of existing clean generators are roughly in line with the scenarios we examined in prior research. Long-term tax credits for carbon capture, direct air capture, clean hydrogen and clean fuels provide a launch pad for these key technologies to scale and build on the investments of the IIJA hub and demonstration programs (kmb – Battelle-PNNL is listening). Federal investments have the potential to generate multi-megaton scale natural carbon removal in soils and forests. Long-term electric vehicle (EV) tax credits will accelerate the diversification of passenger vehicles away from their over-reliance on petroleum, though the EV credits included in this bill are scaled back from previous proposals. Manufacturing tax credits and investments will help diversify supply chains, expand domestic capacity to produce the clean technologies the world needs to achieve deep decarbonization, and can help enable the record levels of wind and solar deployment we project in our modeling.”

(2) While the bill calls for further leasing of public land for gas and oil production in 2022, it is important to separate nautral gas from oil pipeline developement. Overall, this bill is a break with the tradition of treating them the same. An example is the Mountain Valley Pipeline – a natural gas pipeline – from West Virginia through Virginia. While not a Green Party proposal, we can live with it. It is nearly built, and for the short-term to 2030, it is a valid construction. “…At the same time, it’s worth keeping in mind that only a fraction of public land acreage put up for sale actually gets purchased, and only a fraction of sold leases actually get developed. In addition, the minimum acreage requirements—the lesser of 2 million acres or 50% of nominated acreage onshore, 60 million acres offshore—are within historical trends for onshore and offshore lease offerings. We incorporate these provisions into our preliminary estimates of US emission reductions from the package.”

(3) “Our preliminary assessment of the IRA is that its policies, including the new leasing provisions, reduce net GHG emissions by 31% to 44% below 2005 levels in 2030 (Figure 1). We model the impacts of the IRA on three core emissions scenarios—high, central, and low—from our newly updated baselines for 2030 US emissions under current policy in Taking Stock 2022. The range in Taking Stock and in our IRA results reflects uncertainty around future fossil fuel prices, economic growth, and technology costs…”

(4) “In the high emissions case, which features cheap fossil fuels and more expensive clean technologies plus faster economic growth, we find that the IRA can accelerate emissions reductions to a 31% cut below 2005 levels in 2030, compared to 24% under current policy (Figure 2). On the flip side, in the low emissions case, with expensive fossil fuels and cheap clean technologies, the IRA can drive even larger reductions, from 35% below 2005 levels under current policy to 44% below 2005 levels with the bill. In the central emissions case, the bill accelerates emissions reductions to 40% below 2005 levels in 2030, compared to 30% under current policy. If Congress passes this package, additional action from executive agencies and subnational actors can put the US’s target of cutting emissions in half by 2030 within reach…”

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