The United States Department of the Treasury has recently published an analysis on the benefits derived from the Inflation Reduction Act (IRA). The study suggests that previous projections understate the impact of the IRA on reducing greenhouse gas pollution and overlooks its broader benefits.
Treasury officials and staff state, "The IRA will yield cumulative global economic benefits from reduced greenhouse gas pollution of over $5 trillion from the present to 2050. That understates the IRA’s benefits by counting only climate benefits, omitting … the fact that the IRA will also reduce local air pollution, providing domestic health and productivity gains to the United States. Lower-bound estimates of the benefits from those local pollution reductions range from $20 to $49 billion in 2030 alone, compared to that year’s climate benefits estimated at $137 billion." They further assert that the fiscal costs associated with the IRA overstate actual economic costs as they fail to account for a range of non-climate-related advantages.
According to their findings, they declare that the IRA represents one of America's most significant investments in combating climate change. The report highlights two key aspects: its role as a pro-growth policy facilitating economic expansion while curtailing gas emissions, and its function as a place-based policy directing climate investments towards fossil fuel-dependent regions. They estimate that by 2050, "the IRA will yield global benefits of over $5 trillion" solely from reduced greenhouse gas emissions. By focusing solely on climate-related advantages, this figure significantly undervalues other potential gains stemming from this legislation.
The Treasury's analysis concludes that both air quality within America and global climate conditions stand to benefit significantly from this Act. It predicts that in 2030 alone, these improvements could generate between "$20 billion to $49 billion" in value depending on what factors are included in calculations. Ultimately, they argue that any fiscal cost associated with implementing the IRA is vastly overshadowed by its myriad potential benefits.
