Benefits and Costs of the Inflation Reduction Act

Reimagined Article

The Economic Impact of the Inflation Reduction Act

The Team Behind the IRA

Arik Levinson, Deputy Assistant Secretary for Climate & Energy Economics

Karl Dunkle Werner, Economist, Office of Microeconomic Analysis

Matthew Ashenfarb, Research Economist, Office of Climate & Energy Economics

Annelise Britten, Senior Policy Advisor, Office of Economic Policy

The Benefits of the IRA

The Economic Case

The Inflation Reduction Act (IRA) is the United States’ largest investment in combating climate change. While it is recognized for its role in promoting economic growth and directing climate investments to disadvantaged areas, the economic benefits of the IRA are even greater than commonly understood.

Worldwide Climate Benefits and Improved Air Quality

Burning fossil fuels leads to both global climate damage from greenhouse gases and local air pollution issues. The IRA aims to mitigate these problems by reducing CO2 emissions and improving air quality across the United States.

Projected Greenhouse Gas Emissions Reductions

A comprehensive analysis of the IRA’s impact on reducing CO2 emissions reveals a significant positive trend. The IRA accelerates the ongoing transition towards cleaner energy sources, leading to substantial reductions in projected global damages caused by greenhouse gases.

Economic Benefits of Greenhouse Gas Reductions

Each ton of carbon emissions avoided results in economic benefits by reducing future damages caused by extreme weather events. The IRA’s greenhouse gas reductions are projected to yield global economic benefits amounting to over $5 trillion by 2050.

Global vs. Domestic Benefits

The $5.6 trillion benefits projected from the IRA’s greenhouse gas reductions represent worldwide gains. While a portion of these benefits will directly impact the United States, it is crucial to consider the IRA’s global benefits in assessing its economic impact.

Valuing Greenhouse Gases

The official measure of the value of avoided damages from emitting carbon, the “social cost of greenhouse gases,” underscores the global significance of climate change. By valuing greenhouse gases based on global benefits, the IRA’s economic merits are accurately evaluated.

Read More of this Story at – 2024-03-01 10:00:00

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