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How the Senate’s Big Climate Bill Eliminates 4 Billion Tons of Emissions

Posted on August 10, 2022

A week after US Senate Majority Leader Chuck Schumer and Senator Joe Manchin stunned the world by announcing they’d finally struck a deal on a climate, energy and health package, the implications for greenhouse gas emissions are starting to come into view.

The Democratic senators initially said the Inflation Reduction Act of 2022 would cut US emissions about 40% below 2005 levels by 2030, and expert climate policy modelers said reaching that target was plausible. Now three preliminary climate models of the IRA — by researchers at Princeton University, the think tank Energy Innovation, and the research firm Rhodium Group — offer more details on how exactly the US could get there: through changes in the electric power sector, the use of carbon-capture technologies and more.

With news on Thursday that Senator Kyrsten Sinema of Arizona had agreed to support the legislation, passage through the Senate’s slim Democratic majority became more likely. Here are five takeaways on how climate researchers gauge some of the potential impacts of the bill.

1. The new bill brings the US much closer to meeting its climate goals.
A few months into President Joe Biden’s administration, he set a bold US climate goal pledging to cut the country’s economy-wide emissions by 50 to 52% by 2030. Under current policies, the US is on track to cut its emissions between 24% and 35%, depending on the analysis. The new legislation gets the country much closer to where it needs to be.

According to an analysis released Thursday by the REPEAT Project at Princeton, the $370 billion of climate spending in the new bill would cut US emissions roughly 42% below 2005 levels by 2030, or by 3.8 billion metric tons of carbon dioxide equivalent.

This is roughly in line with other models: Energy Innovation concluded this week that the bill would cut emissions between 37 and 41% below 2005 levels. The Rhodium Group finds that the legislation could cut emissions between 31 and 44% below 2005 levels, with a central estimate of 40%.

2. Most of the emissions reductions will come from the power and transportation sectors.
Looking at the deep cuts needed to hit Biden’s climate goal by the end of decade, REPEAT estimates the new bill provides two-thirds of the needed reductions compared to current U.S. policies.

While better than business as usual, there remains an emissions gap equal to about 34% of Biden’s initial goal. That’s a larger gap than what would have been delivered by the abandoned House package known as Build Back Better, according to REPEAT’s modeling.

In the IRA, 24% of emissions reductions come from the power sector, 19% from transportation and 9% from other industries, with smaller shares attributable to other areas. “The Inflation Reduction Act cuts US emissions primarily by accelerating deployment of clean electricity and vehicles,” REPEAT researchers wrote in a presentation summarizing their findings.

A big way this will happen is through a lot more wind and solar power. REPEAT predicts an average of 39 gigawatts of new wind and 49 gigawatts of new solar a year, starting in 2024 and ramping up toward the end of the decade. For comparison, in 2020, the US added 15 gigawatts of wind and 10 gigawatts of utility-scale solar photovoltaic.

“The biggest single area of emissions reductions [in the IRA] is the electric power sector,” in large part due to the tax credits for wind, solar and battery technologies, said Rhodium partner John Larsen. “This is the area where you’ve got 10 years of full-value renewable energy tax credits.”

A couple of other provisions would also work to drive down power sector emissions, Larsen said. For one, there’s a new nuclear credit that helps keep more existing nuclear online than might have been preserved otherwise. “We project 10 to 20 gigawatts of nuclear will be saved by 2030, because of that tax credit, that would otherwise leave the market, and that has big emissions benefits,” he said. “And the last one is the extension and enhancement of the 45Q carbon capture tax credits.” (45Q is shorthand for the existing tax credit for certain types of carbon capture and sequestration projects.)

3. Use of carbon capture would go up 13-fold.
The new bill is projected to increase the use of carbon capture and storage technologies by a multiplier of 13 by 2030, according to the Princeton researchers. The incentives included in the bill would “make carbon capture a viable economic option for the most heavily emitting technologies,” including steel, cement, coal and natural gas plants, they found. REPEAT estimates the total volume of captured carbon dioxide for transport and storage underground could hit 200 million tons per year by the end of this decade.

4. The bill would lead to more emissions reductions than added emissions.
The three models all agree this bill would do more to tackle the climate crisis than add to the problem, even though it would greenlight new oil and gas drilling, a provision criticized by some environmental advocates and by Vermont Senator Bernie Sanders.

Energy Innovation estimates the climate portions of the bill, such as the investments in wind and solar and the electric vehicle tax credits, would cut emissions between 870 to 1,150 million metric tons of carbon dioxide equivalent in 2030. Meanwhile, the provisions to expand oil and gas production could increase emissions up to 50 million metric tons.

In other words, for every ton of emissions added, 24 tons of emissions would be avoided.

These estimates represent a “conservative” or worst-case scenario, said Robbie Orvis, senior director of energy policy design at Energy Innovation. REPEAT’s estimate of oil and gas emissions spurred by the bill was slightly smaller, up to 40 million metric tons.

5. The bill would bring health benefits.
By using EPA’s benefit-per-ton estimates, Energy Innovation’s modelers translated the drop in carbon and other air pollution emissions to impacts on human health. They found the bill, if implemented, could avoid up to 3,900 deaths, up to 100,000 asthma attacks, and up to 417,000 lost work days by 2030.


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