It will also meaningfully reduce consumer energy costs and bolster US energy security over the medium-term, and it picks up where the Infrastructure Investment and Jobs Act (IIJA) left off in supporting the widespread commercial deployment of emerging clean technologies. The range reflects uncertainty around future fossil fuel prices, economic growth, and technology costs. Our preliminary estimate is that the IRA can cut US net greenhouse gas emissions down to 31% to 44% below 2005 levels in 2030-with a central estimate of 40% below 2005 levels-compared to 24% to 35% under current policy. Our preliminary assessment of the new Senate package in this note is based off of our newly updated emissions projections under current policy in Taking Stock 2022 and is informed by the broad components of congressional action that we considered in Pathways to Paris. In a recent progress update, we found that congressional measures along the lines of what was in the BBBA represent some of the highest potential emission reductions across all components of a joint action scenario.
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In that report, we found that joint action consisting of the climate measures in the BBBA, plus additional federal regulations and other activities across all levels of government, can put the 2030 target within reach. Last fall, Rhodium Group published Pathways to Paris, a comprehensive assessment of a portfolio of policy actions that can help the US achieve its 2030 target. In this note, we provide a preliminary assessment of the Senate agreement, the Inflation Reduction Act (IRA) of 2022, and its implications for the US’s 2030 target of reducing emissions by 50-52% below 2005 levels. The new Senate package includes a suite of clean energy tax credits for commercial and emerging clean technologies as well as other key emissions reduction investments. Yesterday, Senate Majority Leader Chuck Schumer and Senate Energy and Natural Resources Chair Joe Manchin announced a compromise agreement and a path forward. It’s been more than eight months since the US House of Representatives passed a comprehensive package of climate change investments as part of its Build Back Better Act (BBBA), which then stalled in the Senate.