How the historic climate bill will dramatically reduce U.S. emissions

The Inflation Reduction Act is expected to cut roughly a billion tons of greenhouse gas emissions a year by 2030, save thousands of lives a year, and prompt a transformation of the U.S. energy and transportation landscape.

By the time Thomas Edison built the country’s first coal-fired electric generating station in New York City in 1882, the sooty black combustible rock was already on its way to becoming the nation’s top energy source. Coal lit lanterns and cook stoves, powered ships and trains, fueled iron and steel production. It would go on to reshape the continent, lighting homes and industries from Fairbanks to Florida. By the 1980s, more than half of all U.S. electricity would come from burning the energy-rich—and planet-warming—fossil fuel.

Now the country is finally preparing to move on.

Thanks to the climate section of the new Inflation Reduction Act, which the U.S. House of Representatives passed on August 12, coal burning, already in decline, may generate as little as 9.7 percent of all U.S. electricity by 2030, just eight years from now, according to an independent analysis. That would mark a 75 percent drop in coal use since 2010. Natural gas use, which had been rising, could also drop 28 percent.

In fact, this new legislation is expected to speed the transition to clean technology so much that non-polluting energy—solar, wind, nuclear power, geothermal energy, hydropower—could supply up to 81 percent of the country’s electricity by the end of this decade, another review finds.

Decades after scientists began warning with increasing alarm that burning fossil fuels was dangerously heating the planet, a $369 billion response finally squeaked through the U.S. Congress and is headed to the president’s desk. It is the biggest, most transformative climate measure in U.S. history. It should signal, experts argue, the dawn of a new era.

“This is the most consequential piece of U.S. legislation for the climate ever,” says Richard Newell, chief executive of Resources for the Future, a nonprofit energy research organization.

Three independent groups of researchers, using separate computer models, agree the act could help reduce U.S. fossil fuel emissions up to 41 or 42 percent below 2005 levels by 2030. That’s if President Joe Biden takes no further executive action to reduce emissions, and if states don’t increase their own clean-energy ambitions—yet analysts expect both those things to occur.

The new act alone is not enough to meet the target Biden set of reducing emissions by half by 2030. It’s less ambitious than his “Build Back Better” proposals, which died in the U.S. Senate. But it still provides 80 percent of the cumulative emissions cuts found in those earlier measures.

U.S. emissions were already declining. But thanks to the new law, by 2030 the U.S. can expect to emit roughly a billion tons less greenhouse gases each year than it otherwise would have, according to the independent researchers. As a side effect, there will be less soot coming out of smokestacks and tailpipes as well—and that reduced air pollution will prevent more than 3,500 premature deaths a year, according to one analysis.

The new act is “historic, transformative, imperfect,” the result of lengthy negotiation and compromise, says Sam Ricketts, a former climate policy adviser to Washington Gov. Jay Inslee’s short-lived presidential campaign. Ricketts, co-founder of Evergreen Action, worked behind the scenes to help craft the proposals.

“It is a catalyzing moment,” he adds, “but we have more work to do.”

How the new climate law works

The new act is so big and came together so quickly that experts are still trying to understand how the pieces will interact to reconfigure our energy landscape.

Unlike previous failed efforts, the legislation relies primarily on incentives to support clean energy and spur innovation, rather than on penalties to deter the use of fossil fuels. It is largely paid for with a 15 percent minimum tax on corporations.

It subsidizes purchases of electric cars, low-energy appliances, and solar panels, and helps cash-strapped families retrofit homes with heat pumps and electric water heaters. It provides tens of billions of dollars in incentives for manufacturing and deployment of wind turbines, solar modules, batteries, and electric vehicles, and gives tens of billions of dollars to states and utilities to hasten the transition to clean energy.

It focuses on disadvantaged communities through direct grant programs and by setting aside money to clean up ports and heavy industry. It pumps billions into soil enrichment programs and other efforts to promote climate-friendly agriculture, and dramatically boosts tax credits for efforts to capture and store carbon-dioxide from industries or to slurp it from the skies. It funds grant programs to create greener jet fuel.

Combined with last year’s $1.2 trillion infrastructure bill, which set aside billions of dollars to upgrade the nation’s electric grid, the Inflation Reduction Act amounts to the greatest infusion of government cash for energy programs since the Manhattan Project.

The bill is expected to transform the electricity sector most quickly, driving adoption of more solar and wind, but also helping keeping nuclear plants in operation. Jesse Jenkins, a climate expert at Princeton University who led one of the independent efforts to forecast the bill’s impacts, projects that the act could prompt emissions reductions of 360 million metric tons a year from electricity generation by 2030.

But he and other analysts also see it setting the stage for a larger and harder transition in transportation, which since 2016 has been the greatest source of U.S. emissions. Across all transport segments—from delivery vehicles and heavy freight trucks to passenger cars—the legislation could reduce emissions by 280 million metric tons, according to the analysis by Jenkins and his colleagues. That would be the equivalent of getting 60 million gasoline-powered cars off the road.

Meanwhile, Rhodium Group, another independent research organization, projects that electric vehicles could account for as much as 57 percent of all vehicle sales in the U.S. by 2030. While supply chain bottlenecks could also cause growth to fall far short of that number, Rhodium researchers expect EV growth eventually will escalate and spill over into other countries.

How a U.S. law could affect the world

In fact, many elements of the new law are expected to tilt the political and economic landscape globally toward cleaner power and fuels. After decades of promises, these actions should make it easier for the United States to push other countries to follow suit. (The U.S. today accounts for 15 percent of global greenhouse gas emissions, second to China, but its cumulative historical emissions are greater than any other country’s.) By further driving down prices for renewables and clean technologies, the act also is likely to make it cheaper for businesses everywhere to adopt them.

For example, the price of solar has plummeted 99 percent since the 1970s, after countries like Germany invested heavily in the technology. That change in cost has probably had a far greater impact on global emissions reductions than the actual installation of solar did for Germany’s emissions.

“The transition is already under way, but what the bill does is basically turbo charge the shift,” Jenkins says.

“Businesses that understood the arc of history knew we were going in this direction eventually,” he adds, “But it’s very hard to plan a multinational business when you have half of the states moving very clearly and half of states and the federal government out to lunch. For the first time, we’ve got the financial might of the federal government supporting all the major climate tools.”

After years of stalled efforts to make progress, “it’s hard to find the words to describe just how important this all is,” says Leah Stokes, a political scientist and climate policy expert at the University of California, Santa Barbara.

Yet to appreciate the importance, many Americans need only look out the window or read the news.

How the law meets the moment

The vote come near the end of an unnerving summer when record-breaking fires raged across Europe and threatened 1,800-year-old sequoias in Yosemite National Park. Thousand-year floods closed northern Yellowstone, killed dozens in Kentucky and Missouri, and stranded tourists in Death Canyon National Park—where people expect to worry about heat stroke, not drowning. Pakistan and India, on the other hand, endured a lengthy, lethal heat wave that scientists said was made 30 times more likely by climate change. And Great Britain hit 40 degrees Celsius (104 degrees Fahrenheit) for the first time ever.

With the heightened awareness of climate change’s impact, it should be no surprise that the measure hasn’t satisfied everyone. One compromise provision ties more leasing for oil and gas drilling offshore and on federal lands to increased leasing for renewable energy.

Stokes understands why that provision angers many pushing for climate action. “The fossil fuel leasing is not ideal; it’s bad,” she says. But she urges critics “to keep their eyes on the prize.” All three independent analyses found the increase in emissions resulting from more fossil fuel leasing would likely be orders of magnitude less than overall reductions.

In the worst case, says Robbie Orvis, with Energy Innovation, oil and gas leasing could add 50 million metric tons of greenhouse gases to the atmosphere—while the bill overall reduces emissions, in his group's analysis, by 1,150 million metric tons.

“For every one-ton increase there are 24 tons of reductions,” Orvis says.

Critics also worry that massive incentives for so-called carbon capture and storage would make it easier for natural gas and coal-fired power plants to stay in business, using that technology to capture their dirty exhaust. But all three reviews found that the economic incentives promoting solar and wind were so much higher that carbon capture would mostly be used in heavy industries, such as ammonia production—where cutting emissions is much harder to do.

When it comes to power generation, “we actually don’t see a lot of carbon capture in our models,” says John Larsen, who oversees Rhodium’s energy and climate policy work.

Finally, some observers worry that the modelers’ projections could ultimately turn out to be too rosy. Supply chain issues, bureaucratic constraints, environmental reviews, and local opposition to clean energy projects might all slow progress, in spite of the financial incentives provided by the new law. Right now, for example, hundreds of gigawatts of renewable energy have been financed across the country, but developers are awaiting permitting to build or connect to the energy system, Orvis says.

But he and others also point out that there are plenty of other reasons to think that the positive changes triggered by the law will snowball beyond their predictions.

“Pretty much every model ever has under-predicted cost declines,” Orvis says. “There’s lots of evidence telling us that whatever emissions reductions we project, it’s probably too low.”

Ricketts, at Evergreen, agrees. “Emissions modeling is neither destiny nor is it an uneducated guess like throwing a dart at a wall,” he says. By its very nature it’s an exercise and weighing uncertainty.

But the past has shown that as technology costs plummet, we often “wildly underestimate” how rapid change may be.

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