Leveraging the IRA to Achieve 80x30 in the US Electricity Sector
This working paper explores how a federal emissions cap could build on the emissions reductions promised by the Inflation Reduction Act.
Abstract
The Inflation Reduction Act (IRA) promises to deliver important reductions in CO2 emissions from the electricity sector along with a host of other benefits to citizens and electricity consumers, but it falls short of achieving the 80 percent reduction below 2005 levels by 2030 (80x30) consistent with meeting the nation’s Paris goals. This paper examines the consequences of the IRA and of policies designed to hit the Paris targets for generation mix, consumer costs of electricity, the federal budget, air quality, and human health. Our modeling shows that the IRA substantially reduces the allowance price for necessary an emissions cap to meet the 80x30 goal in the power sector and that doing so yields savings to consumers, particularly those with lower incomes, and additional health benefits beyond those promised from the IRA.
Editor's note: A previously posted version of this working paper included incomplete data in Figure 2.
