In the 2021 Infrastructure Investment and Jobs Act (IIJA) and the 2022 Inflation Reduction Act (IRA), the United States (U.S.) Congress placed a major bet on the importance of household actions, and the incentives for these actions may yield disproportionately large emissions reductions. Modeling estimates from Rapid Energy Policy Evaluation and Analysis Toolkit (REPEAT) suggest that the IRA's $331 billion investment can reduce carbon emissions by as much as 4% below a 2005 baseline by 2030, assuming a low-friction economic environment. To evaluate the role of household actions, we use a two-part method: 1) Policy analyses of the IRA and IIJA to identify household incentives; 2) Secondary data analysis of REPEAT's policy models to identify the potential for emissions reductions associated with household action. We find that $39 billion, or 12% of climate and energy funds in the IRA and $4.3 billion or 5.7% of clean energy and power funds in the IIJA, target voluntary household actions, and that these actions contribute 40% of the cumulative emissions reductions under the IRA and IIJA, assuming a mid-range scenario for uptake. The importance of household actions to achieving IRA and IIJA's emissions reduction goals suggests that actual impacts will likely vary by behavioral plasticity, and that program design should reflect social and behavioral science insights.
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This content will become publicly available on December 1, 2024
Simulating the Impact of the U.S. Inflation Reduction Act on State-Level CO2 Emissions: An Integrated Assessment Model Approach
Climate change mitigation measures are often projected to reduce anthropogenic carbon dioxide concentrations. Yet, it seems there is ample evidence suggesting that we have a limited understanding of the impacts of these measures and their combinations. For example, the Inflation Reduction Act (IRA) enacted in the U.S. in 2022 contains significant provisions, such as the electric vehicle (EV) tax credits, to reduce CO2 emissions. However, the impact of such provisions is not fully understood across the U.S., particularly in the context of their interactions with other macroeconomic systems. In this paper, we employ an Integrated Assessment Model (IAM), the Global Change Assessment Model (GCAM), to estimate the future CO2 emissions in the U.S. GCAM is equipped to comprehensively characterize the interactions among different systems, e.g., energy, water, land use, and transportation. Thus, the use of GCAM-USA that has U.S. state-level resolution allows the projection of the impacts and consequences of major provisions in the IRA, i.e., EV tax credits and clean energy incentives. To compare the performance of these incentives and credits, a policy effectiveness index is used to evaluate the strength of the relationship between the achieved total CO2 emissions and the overarching emission reduction costs. Our results show that the EV tax credits as stipulated in the IRA can only marginally reduce carbon emissions across the U.S. In fact, it may lead to negative impacts in some states. However, simultaneously combining the incentives and tax credits improves performance and outcomes better than the sum of the individual effects of the policies. This demonstrates that the whole is greater than the sum of the parts in this decarbonization approach. Our findings provide insights for policymakers with a recommendation that combining EV tax credits with clean energy incentives magnifies the intended impact of emission reduction.
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- Award ID(s):
- 1847077
- NSF-PAR ID:
- 10492343
- Publisher / Repository:
- MDPI
- Date Published:
- Journal Name:
- Sustainability
- Volume:
- 15
- Issue:
- 24
- ISSN:
- 2071-1050
- Page Range / eLocation ID:
- 16562
- Format(s):
- Medium: X
- Sponsoring Org:
- National Science Foundation
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