The Inflation Reduction Act (IRA), a now fully supported Democratic bill that addresses climate change and contains wind and solar spending, is expected to be introduced in the US Senate tomorrow. Here’s what its potential impact is, should it become law.
Princeton University yesterday released a Rapid Energy Policy Assessment and Analysis (REPEAT) Toolkit in collaboration with Dartmouth College, Evolved Energy Research and Carbon Impact Consulting which outlines the effects the IRA could have .
The law would nearly double investment in wind power and solar PV to $321 billion in 2030, from $177 billion under the current policy.
Additionally, according to REPEAT, it could spur record wind and solar growth in the United States, with annual additions rising from 15 gigawatts (GW) of wind power and 10 GW of utility-scale solar PV in 2020 to an average of 39 GW per year of wind additions in 2025-26 – more than twice the 2020 rate – and 49 GW per year of solar – more than five times the 2020 rate – with solar growth rates increasing by the after.
Additionally, REPEAT reports that the IRA would reduce annual US energy spending by at least 4% in 2030, saving nearly $50 billion annually for households, businesses and industry. This translates to hundreds of dollars in annual energy savings for American households.
Federal tax credits, rebates and investments in the IRA would shift energy bill costs to the progressive federal tax base. For example, it provides a long-term extension of the U.S. Solar Investment Tax Credit to 30% and $30 billion in production tax credits for clean energy and storage battery manufacturing.
As for its impact on fossil fuels, the report notes:
These savings do not include the additional downward pressure the law will place on oil and natural gas prices by driving down consumption of these products, further reducing energy costs in the United States.
Read more: Why US community solar power is expected to more than double by 2027
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