Leveraging the IRA to Achieve 80x30 in the US Electricity Sector

Maya Domeshek, Dallas Burtraw, Karen Palmer, Nicholas Roy and Jhih-Shyang Shih
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Maya Domeshek: Resources for the Future
Dallas Burtraw: Resources for the Future
Karen Palmer: Resources for the Future

No 23-42, RFF Working Paper Series from Resources for the Future

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.

Date: 2023-11-09
New Economics Papers: this item is included in nep-ene, nep-env and nep-reg
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