Leveraging the Inflation Reduction Act to Achieve 80×30 in the US Electricity Sector

The US Inflation Reduction Act (IRA) promises to deliver important reductions in CO2 emissions from the electricity sector along with a host of other benefits to citizens and electricity consumers, but it falls short of achieving the 80 percent reduction (below 2005 levels) by 2030 (80×30) consistent with meeting the nation’s Paris goals. This paper examines the consequences of the IRA and of policies designed to hit the Paris target for generation mix, consumer costs of electricity, the federal budget, air quality, and human health. Our modeling shows that the IRA substantially reduces the allowance price necessary under an emissions trading cap to meeting the 80×30 goal in the power sector and that doing so yields savings to consumers, particularly those with lower incomes, and additional health benefits beyond those promised from the IRA.