US Climate Economy Picks Up Steam After the IRA

US Climate Economy Picks Up Steam  After the IRA

In 2029, US solar and wind could be as cheap as $5 per megawatt-hour, making it the cheapest in the world, according to a research note from Credit Suisse released last month.

In addition to stimulating clean energy growth, the Inflation Reduction Act (IRA)will also inject $1.7 trillion into the green-energy economy, leading to more decarbonization by awarding tax credits to people and businesses. Though no republicans voted in favor of the IRA, red states stand to benefit the most from the bill. States may try to stymie new clean energy development, but the bill is unlikely to be repealed, even by a GOP-controlled congress.

Why This Matters

Incentivizing decarbonization is important given the increasingly bleak consequences of relying on fossil fuels. A UN report released last month stated that there’s a 48% chance that global temperatures could rise 1.5 degrees C compared with pre-industrial times within the next five years, much sooner than expected. Were this to happen, it would be nearly impossible to meet the goal of the Paris Agreement, which was to cap temperature rise at 1.5 C. Consequently, extreme weather events will become even more common, and could deplete the global economy, threatening governments all over the world.

The good news is that the climate economy is picking up steam across the world -- renewable energy is cheaper than ever, and generates 75% of all new power, while coal use has fallen to a mere 4%. The IRA represents the US doing its part to mitigate emissions after a long stretch of hesitance on climate action. Just in the US, new clean-energy jobs are beating out fossil fuels, with a potential 73% of total net job growth in 2023. States like California can now run on 100% renewable energy for a brief amount of time. Plus, innovations in energy storage are making renewable energy both more resilient, and cheaper.

NBC: How The Inflation Reduction Act Could Impact The Fight Against Climate Control, August 5, 2022.

Now This: How the Inflation Reduction Act Is Historic Climate Opportunity, July 30, 2022.

NBC: Biden Delivers Remarks On The Inflation Reduction Act, July 28, 2022.

States Take Action

The benefits of the IRA will help fuel a suite of new state-led energy projects and climate commitments.

Perhaps this momentum will help inspire other states -- like Florida, which is reeling from Hurricane Ian -- which have been slow to climate action.

AP: West Coast Leaders Pledge Cooperation on Climate Change, October 6, 2022. 

CBS 8: California Ahead of Clean Energy Goals, March 11, 2022.