ICYMI: Analysts & Experts Highlight Climate & Economic Benefits Of The Inflation Reduction Act
FOR IMMEDIATE RELEASE
August 2nd, 2022
Contact: Erik Mebust, [email protected]
WASHINGTON, DC — In the days since Majority Leader Schumer and Sen. Manchin released details of the proposed Inflation Reduction Act, analysts from a range of disciplines have weighed in on the benefits of the bill. Several reports have found that the package would reduce emissions by roughly 40% by 2030, reduce consumer energy costs, increase GDP, and create over a million jobs in the clean energy industry.
In a sign of expert consensus on the bill’s benefits, noted inflation hawk Larry Summers praised its deflationary effects: “This bill is fighting inflation and it’s got a whole set of collateral benefits as well.” In a letter first shared with CNN, he was joined by 126 top economists who wrote to the administration that “these investments will fight inflation and lower costs for American families while setting the stage for strong, stable, and broadly-shared long-term economic growth.” They joined a long list of energy analysts who affirmed the Majority Leader’s claim that the bill would tackle climate change, alleviate environmental injustice, and put the U.S. on the path to meeting its commitments under the Paris Agreement.
Here’s what they found:
- The Inflation Reduction Act would cut greenhouse gas emissions 40 percent below 2005 levels, placing the US within reach of its emissions reduction commitments under the Paris Agreement.
- Energy Innovation found the bill would cut emissions 37 to 41 percent.
- Rhodium Group found the bill would cut net greenhouse gas emissions 31 to 44 percent below 2005 levels in 2030, compared to 24% to 35% under current policy.
- Princeton’s REPEAT Project, headed by Professor Jesse Jenkins, found that the bill would cut net greenhouse gas emissions 41 percent below 2005 levels in 2030.
- For every ton of emissions generated by the legislation’s oil and gas provisions, at least 24 tons of emissions are avoided by the other parts of the bill. The report concludes that “despite increased oil and gas extraction, the IRA overwhelmingly reduces emissions.” (Energy Innovation)
- Avoided air pollution as a result of the Act’s climate provisions could prevent 3,700 to 3,900 premature deaths in 2030, in addition to 99,000 to 100,000 asthma attacks, and 405,000 to 417,000 lost workdays. Avoided deaths are concentrated in communities of color, which have historically experienced the most harm from air pollution. (Energy Innovation)
On consumer savings:
- Moody’s found that the typical American household is set to save an estimated $300 per year on energy bills in today’s dollars. (Moody’s Analytics)
- Clean energy investments in the package can help to reduce consumer energy costs in the medium term. (Rhodium Group)
- The bill’s tax credits make it easier for families to electrify their homes. If a household installs a modern electric heat pump to replace their furnace, a heat pump for water heating, and converts to an electric vehicle and rooftop solar, they will save $1,800 per year on energy bills. (Rewiring America)
On macroeconomic impacts:
- The Inflation Reduction Act will reduce inflation over the 10-year budget horizon.
- By the fourth quarter of 2031, the consumer price inflation index will be 0.33% lower because of the legislation, representing a reduction in CPI inflation of 3.3 basis points per annum on average. (Moody’s Analytics)
- “To fight inflation, we want policies that will increase supply or reduce demand. And this does both. Almost every one of these policies, in and of itself, will fight inflation. And on net, the entire package most certainly will.” (Maya MacGuineas, President of the Committee for a Responsible Federal Budget, 7/28)
- The legislation also mitigates the economic cost of inaction, leading to GDP growth. Compared with a business as usual scenario where no additional climate action is taken, real GDP is approximately 0.1% higher a decade from now because of the Inflation Reduction Act, 0.6% higher by 2050, and 2.7% higher by 2100. (Moody’s Analytics)
- The Inflation Reduction Act could increase GDP by 0.84 to 0.88 percent in 2030, and create up to 1.5 million jobs in 2030, mostly in the manufacturing, construction, and service industries. (Energy Innovation)