The Inflation Reduction Act could “shape the direction of the American economy, ” potentially spending twice as much as anticipated due to the popularity of the “uncapped” tax credits designed to incentivize the shift to a clean energy lifestyle.
In The Climate Economy Is About to Explode, Robinson Meyer of the Atlantic reports on recent research by the international bank Credit Suisse.
There’s no budget or limit written into the law that restricts how much the government can spend. The widely cited figure for how much the IRA will spend to fight climate change—$374 billion—is in large part determined by the Congressional Budget Office’s estimate of how much those tax credits will get used.
But that estimate is wrong, the bank claims. In fact, so many people and businesses will use those tax credits that the IRA’s total spending is likely to be more than $800 billion, double what the CBO projects. And because federal spending tends to catalyze private investment, that could send total climate spending across the economy to roughly $1.7 trillion over the next 10 years.
Additionally, the bank reports, that the US, is “poised to become the world’s leading energy provider
across the entire spectrum of energy production — affording us a “competitive advantage in low-cost clean electricity and hydrogen production, infrastructure, geologic storage, and human capital.”
By 2029, U.S. solar and wind could be the cheapest in the world at less than $5 per megawatt-hour, the bank projects; it will also become competitive in hydrogen, carbon capture and storage, and wind turbines. (The law will help America’s battery industry, but the bank doesn’t see the U.S. becoming the world’s biggest battery producer, given that China already has such a dominant advantage.)
Credit Suisse also pointed out that even if the Republicans were to take over.control in 2024, they would be unlikely to repeal the IRA because of its positive impact on jobs and the overall economy in Reublican states.
What could hinder the opportunities presented by the IRA is failure to build out the necessary infrastrucutre and “to get government approval to permit enough power lines, green infrastructure, and carbon-injection wells for the law to matter.”