The United States has considerably accelerated its efforts to reduce carbon emissions since the Inflation Reduction Act (IRA) introduced by President Joe Biden was passed in 2022.
The United States has considerably accelerated its efforts to reduce carbon emissions since the Inflation Reduction Act (IRA) introduced by President Joe Biden was passed in 2022.
Analysts and scientists have noted that the pace of emission cuts has doubled, propelled by the IRA’s provisions that offer a mix of direct payments and tax credits to promote clean energy initiatives. More than 80 projects focusing on solar, wind, and energy storage have capitalized on these incentives.
Last year, the IRA, coupled with the Bipartisan Infrastructure Law, allocated a total of $239 billion toward clean energy, electric vehicles (EVs), building electrification, and carbon management—a 38% increase from 2022. According to the Clean Investment Monitor, a collaboration between the Rhodium Group and MIT, this funding surge has initiated a wave of clean energy projects across the nation. However, experts caution that achieving Biden’s broader climate goals of net-zero emissions by 2050 will require further efforts.
Projections suggest that the actual spending under the IRA could far surpass the initial estimate of $400 billion. Goldman Sachs Group has forecasted a potential expenditure of up to $1.2 trillion by 2031. Two years after the enactment of the landmark climate legislation, sectors such as electrical power and battery manufacturing have emerged as early beneficiaries. Additionally, traditional clean energy sources like wind and solar have experienced revitalization.
The implementation of the IRA has not been without challenges. State and local regulations have impeded the development of essential infrastructure such as new transmission lines and EV charging stations. Moreover, certain sectors, including hydrogen, carbon sequestration, geothermal, and nuclear energy, have lagged behind in harnessing the benefits of the legislation.
Oil companies have voiced concerns over the criteria for tax credits, particularly regarding hydrogen fuel plants. Exxon Mobil Corp’s Chief Executive, Darren Woods, has indicated potential setbacks to major investment plans due to regulatory uncertainties. Similarly, obstacles in the EV sector, such as insufficient transmission lines and local-content requirements, have complicated the utilization of tax breaks.
The influx of cheap Chinese EVs into the market has raised apprehensions among U.S. automakers, prompting calls for stricter tariffs and U.S. content rules. To counteract this trend, Washington has initiated investments in semiconductor plants to bolster domestic production capabilities.
Despite industry complaints and regulatory hurdles, the IRA has contributed to a 4% annual reduction in carbon emissions, doubling the previous rate of progress, according to research published in the journal Science. However, experts argue that further acceleration is necessary to meet ambitious climate targets.
Princeton Mechanical and Aerospace Engineering professor Jesse Jenkins, a participant in the study, emphasized the need for more aggressive action, stating that while the Inflation Reduction Act has doubled the pace of emission cuts, tripling it would be necessary to achieve the 2030 climate goals and advance towards net-zero emissions by 2050.
In conclusion, while the U.S. has made significant strides in reducing carbon emissions following the enactment of Biden’s climate legislation, there remains a formidable road ahead to realize long-term environmental objectives. Overcoming regulatory barriers and accelerating clean energy deployment will be essential to meet the challenges of climate change.