The proposed Inflation Reduction Act (IRA) could slash US greenhouse gas (GHG) emissions by up to 41% by 2030, making it the biggest climate investment in the country’s history, according to US think tank Energy Innovation.

On 27 July, Democrats in the US Senate released legislative text for the IRA that includes $369bn in funding for climate and clean energy provisions. These emissions-reduction measures range from clean energy and electric vehicle tax credits to huge investments in domestic manufacturing of clean technologies and environmental justice. 

Senator Joe Manchin speaks to reporters outside his office in the Hart Senate Office Building in Washington, DC on 2 August 2022, as negotiations in the US Senate continue on the Inflation Reduction Act. (Photo by Anna Moneymaker/Getty Images)

Energy Innovation modelled the IRA to estimate its impact on emissions reductions, job creation and public health, using its open-source US Energy Policy Simulator (EPS).

The research found that if the IRA passes, it could cut GHG emissions by 37–41% below 2005 levels. With additional executive and state actions, the US could realistically achieve its nationally determined commitments (NDCs) under the Paris Agreement

The EPS also shows that for every tonne of emissions increases generated by IRA oil and gas provisions, at least 24 tonnes of emissions are avoided by the other provisions. Under a business-as-usual (BAU) scenario (including all enacted federal and state policies to date), the modelling forecasts the US would reduce emissions 24% compared with 2005 levels by 2030.

The legislation would therefore enable the country to close 50–66% of the emissions gap between BAU and the NDC in 2030. In absolute terms, US emissions in 2030 are projected to be 2.5–2.8 billion metric tonnes lower than in 2005. 

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData

Energy Innovation also forecasts the IRA to generate huge public health and jobs benefits, preventing up to 3,900 premature deaths from air pollution in 2030, creating up to 1.5 million jobs and resulting in a 0.84–0.88% rise in gross domestic product. These benefits all come despite a rise of 50 million metric tonnes in oil and gas production emissions in 2030 from the new oil and gas leasing requirements.