For climate advocates in the United States, the past month felt like a roller coaster. In early July, negotiations in Congress on clean energy legislation of historic proportions collapsed, and the effort seemed doomed. But backroom talks continued and last week key senators suddenly announced an agreement on a $369 billion bill that would provide the most climate funding ever seen in the United States. “It was the best kept secret, potentially, in Washington history,” says Leah Stokes, a political scientist at the University of California (UC), Santa Barbara.
The backers—Senate Majority Leader Chuck Schumer (D–NY) and Senator Joe Manchin (D–WV), who had initially balked at the cost—announced that the draft bill would ensure U.S. carbon dioxide (CO2) emissions would fall by 40% by 2030, compared with 2005.
Sponsors of the bill, which must still pass the full Senate and House of Representatives, might be expected to oversell its impact. But energy and climate modelers have now scrutinized its 725 pages and concluded the 40% claim is about on target. They plugged key provisions, including subsidies for renewable energy and tax cuts for electric vehicles, as well as controversial incentives for the fossil fuel industry, into their models. Two such models conclude that if the bill becomes law, U.S. greenhouse gas emissions would fall by about 40% by 2030, although only part of that stems from the bill alone. One model also finds that the renewable energy subsidies will likely create 1.5 million jobs and prevent thousands of premature deaths from air pollution, especially in disadvantaged communities.
“It’s a historic step, no doubt about it,” says Marshall Shepherd, an atmospheric scientist at the University of Georgia and former head of the American Meteorological Society. “It really does a lot to enhance the transition to a renewable energy economy.”
U.S. emissions have been falling by about 1% per year since 2005, when emissions peaked, largely because of replacing coal power with wind and solar power, as well as natural gas, and rising fuel economy in light cars. But this pace is nowhere fast enough to meet President Joe Biden’s goal of a 50% to 52% cut in emissions by 2030 relative to 2005, pledged as the U.S. contribution to the Paris accord’s goal of holding global temperature rise to 1.5°C.
Biden’s major effort had been the Build Back Better Act, which would have invested $560 billion in cutting greenhouse gases but died in the Senate after Manchin objected. The smaller new bill, called the Inflation Reduction Act of 2022, preserves much of the bang for clean energy, says energy systems expert Jesse Jenkins of Princeton University’s Rapid Energy Policy Evaluation and Analysis Toolkit Project, which runs one of the models. “I think [Senate staff] did a miraculous job,” he says. In particular, the bill provides subsidies to expand renewable energy and lure consumers to buy electric vehicles, solar panels, and climate-friendly home heat pumps.
To evaluate the climate impacts of the legislation, Jenkins and other modelers simulate the entire U.S. energy system from the smallest electric vehicles to nuclear plants and add the proposed policies to see how they impact CO2 emissions. Scientists also fold in results from other models that focus on factors such as the impact of agricultural policies on two other causes of greenhouse warming: methane emissions from livestock and nitrous oxide released from fertilized fields. Modelers put everything together to forecast emissions trends, says modeler Ben King of Rhodium, an independent research firm.
Just a day after the bill was released, Rhodium posted preliminary estimates on its website. The topline result: a 31% to 44% reduction in greenhouse gas emissions from 2005. Compared with current policies, that’s an additional drop of 7 to 9 percentage points. Variables such as the price of natural gas account for much of the uncertainty: If gas prices drop, utilities might favor gas over renewable power, slowing the decline in carbon emissions.
Models can have difficulty predicting the pace of technology cost reductions and quirks of human behavior, cautions economist Meredith Fowlie of UC Berkeley. “I wouldn’t believe any one projected number, but [key] models agree in a qualitative sense that this is going to bend the trajectory,” she says.
Today, the think tank Energy Innovation narrowed the range, forecasting emissions reductions of 38% to 41%. It estimates a largergain from the bill itself, just 13 to 17 percentage points below current policies.
Both analyses find the two most important factors driving down emissions are clean electricity tax credits—which the bill provides for at least a decade—and expanded tax credits for both new and used electric vehicles. The subsidies will help utilities install more capacity from wind farms and solar panels and help keep nuclear power plants financially viable as they face competition from cheap natural gas. Previous analyses had also pointed to green electricity generation and transportation as crucial to reducing emissions.
Other provisions of the proposed bill could eventually lead to further CO2 reductions, such as investment in technologies that directly remove carbon from the atmosphere and capture it from fossil fuel plants.
The bill also includes some climate-unfriendly provisions, apparently added at Manchin’s request. It requires the federal government to offer several lease sales of offshore oil and gas resources, with more on the table if public lands are opened to renewable energy efforts like wind farms. The leases could boost oil and gas production from federal lands by an extra 50 million tons per year in 2030, according to Energy Innovation. Overall, however, climate wins out, analysts say: For each additional ton of C02 from fossil fuels, other provisions of the bill would reduce emissions by 24 tons.
The bill must still pass the Senate, where Democrats need every possible vote in their party, and then it will go back to the House. Stokes, who advised Democrats on the bill, says she’s hopeful the measure will be on Biden’s desk by mid-August. “The United States is really going to be a climate leader globally if we can get this bill over the finish line.”
It won’t be enough, however, for the United States to reach its Paris goal of a 50% greenhouse gas reduction by 2030. For that, more federal regulation and state action will be necessary, King and others say. “It’s all hands on deck,” says energy and climate modeler John Bistline of the Electric Power Research Institute.
The ultimate—and necessary—goal is cutting U.S. emissions to zero, says Emily Grubert, a civil engineer and environmental sociologist at the University of Notre Dame. “People keep talking about this as the biggest climate investment in a generation. I can only say—I hope not.”
Correction, 2 August, 12:40 p.m.An earlier version of this story reversed numbers from the Rhodium Group and Energy Innovation in their estimates of the percentage drops in emissions due to the bill itself.