Full Title: Projecting Electricity-Sector Investments Under the Inflation Reduction Act: Revisiting Key Cost Assumptions and Exploring Potential Interactions with EPA’s Greenhouse Gas Proposal
Author(s): Martin Ross, Jackson Ewing, Brian Murray, Tim Profeta, and Robert Stout
Publisher(s): Duke Nicholas Institute
Publication Date: December 16, 2023
Full Text: Download Resource
Decarbonizing the electricity sector will be an essential component of any future climate policy. Two recent developments—the Inflation Reduction Act (IRA) legislation of August 2022 and the US Environmental Protection Agency’s (EPA) proposed Greenhouse Gas Standards and Guidelines of May 2023—address the zero-carbon and fossil fuel emission sides of the problem, respectively. This paper revisits the IRA in the context of recent cost increases for financing in general and for construction of renewables in particular to explore how these changes affect fulfillment of the legislation’s goals. The analysis also looks at interactions between the IRA and EPA greenhouse gas (GHG) proposals to see how the system may respond and where the two approaches might put the electricity sector on an eventual path to decarbonization.