New Bill Set To Double The Pace At Which The American Economy Has Been Decarbonising

Annual emissions could be cut by as much as 44% by the end of the decade as a result of the Inflation Reduction Act 2022. Analysis shows that the Inflation Reduction Act would be the most significant climate bill passed by Congress and would double the pace at which the American economy has been decarbonising. 

The Inflation Reduction Act was agreed by Senator Joe Manchin and Senate Majority Leader Chuck Schumer. Regarding the climate aspect of the Bill, President Joe Biden stated that “It addresses the climate crisis and strengthens our energy security, creating jobs manufacturing solar panels, wind turbines, and electric vehicles in America with American workers.” [1] 

Estimations of the climate effect of the Bill were conducted by Energy Innovation, Rhodium Group and the REPEAT Project predicting around a 40% drop in emissions by the end of the decade.  


The Executive Director of Strategy at Energy Innovation, Anand Gopal, stated that “I was sceptical of it when we started doing the model […] But now I’m convinced that this is a really meaningful action by the United States on climate in this decade.” [2] 

As seen by the graph below, the Bill is only the beginning of tackling Biden’s 2030 climate goal. Contributions by states, cities, companies and the Environment Protection Agency are still necessary to reach these goals. 


What the Bill does do is boost America’s influence in international climate negotiations, enabling them to encourage other countries to follow in their footsteps and rapidly decarbonise. Gopal stated that, before, the US had “very limited credibility” when it came to international climate negotiations such as the UN climate forums. The passing of the Bill means “that is going to change”. [2] 

The predicted success of the Bill comes from making clean energy cheap, as stated by Jenkins. Biden stated, “It lowers families’ energy costs by hundreds of dollars each year.” Generous subsidies will be made to spur clean electricity production while creating programs to tackle bottlenecks on deploying that electricity, such as America’s inability to build an interconnected and blackout-proof grid. [1] 

The Bill can be divided into two categories: 

  1. Policies that will drive greenhouse gas pollution out of the US economy during this decade mainly through a new set of tax credit that will apply to any form of zero-carbon power production. These policies also focus on the most carbon intensive side of the economy, transportation. New electric cars, SUVs, pickups and vans will be subsidised by up to $7,500. 
  1. Policies that aim to reduce emissions after 2030 mainly through focusing on the most polluted sector, the industrial sector. Incentives will underwrite new factories, encourage clean-energy manufacturing and the push to net-zero. These policies hope to turn the US into the global leader in the nascent geothermal hydrogen and carbon-removal industries. 

While it is good to recognise that these are all estimates that fail to take into account external factors such as Russia’s invasion of Ukraine, this does not undermine the impact of the Inflation Reduction Act. For example, Rhodium gave a carbon pollution cut estimate by 2030 of between 31% – 44%. Therefore, in the worst-case scenario, there will still be an estimated 31% cut and the US will still have cut a large portion of emissions from the power and transportation sectors. 

In a statement, Biden said “The House should pass [the Bill] as soon as possible and I look forward to signing it into law.” 



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