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How the New Climate Bill Would Reduce Emissions – The New York Times

A majorclimate and energy package announced last week in a deal by Senate Democrats would put the United States much closer to its goal of cutting global warming pollution in half by 2030, several new independent analyses have concluded.






U.S. net greenhouse gas emissions

Current Policies

New Climate Bill

–50% below 2005 levels

metric tons CO2-eq.

Current Policies

U.S. net greenhouse gas emissions

New Climate Bill

–50% below 2005 levels

metric tons CO2-eq.

U.S. net greenhouse gas emissions

Current Policies

New Climate Bill

–50% below 2005 levels

metric tons CO2-eq.


Source: REPEAT Project, E.P.A. | Notes: Net emissions include land carbon sinks. Historical emissions for 2021 are estimated. Projected emissions reflect average model estimates. Modeling for the new climate bill is based on draft legislation released on July 27, 2022.

If signed into law, the bill’s hefty tax incentives for low-carbon technologies could enable the country to cut its net greenhouse gas emissions by roughly 40 percent below 2005 levels by the end of this decade, according to forthcoming research by the Princeton-led REPEAT Project. While that falls short of President Biden’s goal to cut U.S. emissions by at least 50 percent below 2005 levels by 2030, experts said that additional policies like new federal regulations or more aggressive state and local climate action could help close the gap.

“This bill does about two-thirds of the work we need to do to hit our climate goals, which for a single piece of legislation is a really big deal,” said Jesse Jenkins, an energy systems engineer at Princeton who helped lead the modeling effort. “And by driving down the cost of clean energy, it can make it easier for states or cities or companies to take further climate actions on their own.”

Without the bill, emissions in the United States were already on track to fall roughly 26 percent from their peak in 2005 by the end of this decade, the researchers found. That’s partly because electric utilities have been closing down coal-fired power plants in favor of cheaper and cleaner natural gas, wind and solar power, and because Americans are starting to buy more electric vehicles, which typically create fewer emissions than gasoline-powered models.

The new bill would help accelerate the trend toward lower emissions in electricity and transportation, expanding tax credits for new wind turbines, solar panels, batteries and electric vehicles. But it would also invest billions in other technologies like advanced nuclear reactors, clean-burning hydrogen fuels, carbon capture and storage and electric heat pumps that could help curb emissions from heavy industry and buildings, two areas where the country has made little progress to date.

The REPEAT Project analysis is broadly in line with early estimates from analysts at Rhodium Group and Energy Innovation, two nonpartisan research groups that made public their own modeling over the past week.

Mr. Biden set a goal last year of cutting U.S. emissions in half by the end of this decade, which is roughly the pace scientists say the whole world must follow to limit global warming to 1.5 degrees Celsius (2.7 degrees Fahrenheit) above preindustrial levels in order to minimize the risk of catastrophic heat waves, wildfires, floods and droughts. Earth has already warmed roughly 1.1 degrees Celsius over the past century.

For the past two years, however, Democrats have struggled to get major climate legislation through the evenly divided Senate, where no Republicans support such a measure. One of the key Democratic holdouts, Senator Joe Manchin III of West Virginia, had said he could not vote for a fresh spending bill if it aggravated inflation, which hit a 40-year high in March.

A key breakthrough appeared to come last week, when Mr. Manchin announced that he would back a compromise measure. The bill, known as the Inflation Reduction Act of 2022, includes roughly $485 billion in new spending and tax breaks — most of that toward climate and energy programs, as well as smaller amounts for health care — which is offset by roughly $790 billion of tax increases and other savings, according to a preliminary estimate by the Committee for a Responsible Budget, a nonpartisan group.






Savings +$790 billion

Spending –$485 billion

Clean fuel and

vehicle tax

credits

Energy and Climate Programs

Corporate Taxes and Enforcement

Clean

manufacturing

tax credits

I.R.S. tax enforcement

savings

Clean electricity tax credits

15 percent corporate minimum tax

+$125 billion

–$160 billion

+$315 billion

–$35 billion

–$35 billion

Other climate and energy spending

–$120 billion

Clean energy incentives for individuals

–$35 billion

Carried

interest

change

Methane and

superfund fees

Health Care Benefits

Medicaid prescription drug

benefits and other spending

+$20 billion

Extension of expanded ACA subsidies for 3 years

–$35 billion

–$65 billion

Drug price inflation cap

Prescription Drug

Pricing Reform

+$100 billion

Unspent: $305 billion

Towards paying down the federal deficit

Repeal Trump-era drug

rebate rule

+$120 billion

Negotiation of certain drug prices

+$100 billion

Savings +$790 billion

Spending –$485 billion

Clean fuel and

vehicle tax

credits

Energy and Climate

Corporate Taxes and Enforcement

Clean

manufacturing

tax credits

I.R.S. tax

enforcement

savings

15 percent corporate minimum tax

Clean electricity tax credits

+$315 billion

–$160 billion

–$35 billion

–$35 billion

+$125 billion

Other climate and

energy spending

–$120 billion

Individual incentives

–$35 billion

Carried

interest

change

Other fees

Health Care Benefits

Medicaid and other

health spending

Extension of expanded ACA subsidies

for 3 years

–$65 billion

–$35 billion

Drug price inflation cap

Prescription Drug

Pricing Reform

Unspent: $305 billion

+$100 billion

Towards paying down the federal deficit

Repeal Trump-era

drug rebate rule

+$120 billion

Negotiation of certain drug prices

+$100 billion

Savings +$790 billion

Corporate Taxes & Enforcement

I.R.S. tax

enforcement

savings

15 percent corporate minimum tax

+$315 billion

+$125 billion

Carried

interest

change

Other fees

Drug price inflation cap

Prescrip. Drug

Pricing Reform

+$100 billion

Repeal Trump-era

drug rebate rule

+$120 billion

Negotiation of certain drug prices

+$100 billion

Spending –$485 billion

Clean fuel and

vehicle tax

credits

Energy and Climate

Clean

manufacturing

tax credits

Clean electricity tax credits

–$160 billion

–$35 billion

–$35 billion

Other climate and

energy spending

–$120 billion

Individual incentives

–$35 billion

Health Care Benefits

Medicaid and other

health spending

Extension of expanded ACA

subsidies for 3 years

–$35 billion

–$65 billion

Unspent: $305 billion

Towards paying down the federaldeficit

Savings +$790 billion

Corporate Taxes and Enforcement

I.R.S. tax enforcement

savings

15 percent corporate minimum tax

+$125 billion

+$315 billion

Carried

interest

change

Methane and

superfund fees

+$20 billion

Drug price inflation cap

Prescription Drug

Pricing Reform

+$100 billion

Repeal Trump-era drug

rebate rule

+$120 billion

Negotiation of certain drug prices

+$100 billion

Spending –$485 billion

Clean fuel and

vehicle tax

credits

Energy and Climate Programs

Clean

manufacturing

tax credits

Clean electricity tax credits

–$160 billion

–$35 billion

–$35 billion

Other climate and energy spending

–$120 billion

Clean energy incentives for individuals

–$35 billion

Health Care Benefits

Medicaid prescription drug

benefits and other spending

Extension of expanded ACA subsidies for 3 years

–$35 billion

–$65 billion

Unspent: $305 billion

Towards paying down the federal deficit


“Rather than risking more inflation with trillions in new spending, this bill will cut the inflation taxes Americans are paying, lower the cost of health insurance and prescription drugs, and ensure our country invests in the energy security and climate change solutions we need to remain a global superpower,” Mr. Manchin said last week.

Economists and policy experts largelyagree the bill could help mitigate inflation, although they cautioned that its effects may be moderate. They also noted that the roughly $300 billion in deficit payments over the next decade would put a relatively small dent in the overall debt of the United States.

Still, if the new legislation passes the House and Senate, it would be the largest climate investment ever made by Congress, amounting to roughly $385 billion over 10 years. Experts said the measure could provide fresh momentum to international climate talks and prod other nations to do more. It could also help reduce the cost of various clean-energy technologies, potentially making it easier for other countries to transition away from fossil fuels.

The bill will not solve global warming on its own. A United Nations report last yearestimated that humanity will likely need to cut greenhouse gas emissions by an additional 15 to 30 billion tons by 2030, compared with its current trajectory, to avert the worst impacts of climate change. Mr. Jenkins’s analysis suggested the new Senate bill would supply nearly one billion tons of additional cuts.

“Assuming it passes, I think this clearly strengthens U.S. influence in the international talks and will spur further action by other major emitters,” said Dan Lashof of the World Resources Institute. “I think the history of climate action shows that when the United States makes a significant investment in clean energy technology, countries like China and India don’t want to be left behind.”

The legislation could transform nearly every aspect of American energy production. Mr. Jenkins’ analysis estimates that companies would install twice as much solar and wind power per year by 2030 as they would have without the bill. The bill would also offer incentives for utilities to keep their nuclear plants open for longer. Without that provision, as much as one-third of the nuclear fleet, still the nation’s largest source of low-carbon energy, is at risk of closing by 2030, Rhodium Group has estimated.

The bill would also give companies incentive to install devices to capture carbon dioxide from industrial facilities and bury it underground before the gas can escape into the atmosphere and heat the planet. While this technology has struggled to gain traction because of high costs, Mr. Jenkins’ modeling suggests that new tax credits could help spur the capture of roughly 200 million tons of carbon dioxide by 2030.

Calpine Corporation, a Houston-based firm that owns the nation’s largest fleet of natural gas power plants, has identified 11 facilities that are good candidates for retrofitting with carbon capture technology. The expanded tax credits could offer a significant boost in helping to get the first few projects up and running this decade, said Caleb Stephenson, Calpine’s executive vice president of commercial operations.

There are still uncertainties around the bill’s precise effects, however, in part because it does not require companies to cut their emissions. Much will depend on how quickly new low-emission energy sources displace coal, oil and natural gas, the major drivers of global warming. For example, if oil prices stay high, the tax credits for electric vehicles could spur consumers to ditch their gasoline-powered cars more quickly. But if gasoline gets cheap again, the transition might unfold more slowly.

And clean energy could face other hurdles: While the bill would give companies financial incentive to build more wind and solar power, such projects could be hobbled by local opposition or a lack of new transmission lines. The availability of tax credits for electric vehicles will depend on whether automakers can source their battery materials from the United States or its free-trade partners, which could be a difficult hurdle to clear.

The legislation also has several provisions that could increase emissions in some places. To secure the support of Mr. Manchin, the bill would mandate lease sales for new oil and gas exploration in the Gulf of Mexico and the Cook Inlet in Alaska. And it would require the Interior Department to hold auctions for fossil fuel leases if it plans to approve new wind or solar projects on federal lands.

But the impact of those measures is likely to be small. Analysts at Energy Innovation calculated that for each ton of emissions created by the leasing provisions, “at least 24 tons of emissions are avoided by the other provisions.”

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