Here’s Where the Inflation Reduction Act Is Working, and Where It’s Falling Short

A year and a half after President Biden signed into law a sweeping bill to tackle climate change, sales of electric vehicles have largely boomed in line with expectations, according to a new analysis by three groups tracking the impact of the law.

But problems with supply chains, obtaining permits and overcoming local opposition have bogged down one of the climate law’s other big goals: generating vastly more electricity from wind, solar and other nonpolluting sources. Even though the United States added record amounts of renewable power and batteries last year, that rapid growth fell short of the levels needed to meet the country’s goals for slashing the emissions that are rapidly heating the planet, the analysis said.

When the law, known as the Inflation Reduction Act, was approved in 2022, analysts predicted that it would help cut America’s greenhouse gas emissions roughly 40 percent below 2005 levels by 2030. The measure contains hundreds of billions of dollars in tax credits and spending for clean energy technologies like wind turbines, solar panels, batteries, electric vehicles and hydrogen fuels.

The law is meeting expectations in some areas and falling short in others, according to the new assessment by researchers from the Princeton-led REPEAT Project, the research firm Rhodium Group, and Energy Innovation, a nonprofit organization.

Electric vehicle sales are largely on track to help fulfill the law’s projected emissions reductions after increasing more than 50 percent over the past year. A record 9.2 percent of all new cars sold in the United States in 2023 were either fully electric or plug-in hybrid models, which was on the high end of what analysts had predicted would happen after the law passed.

It is less certain that automakers will repeat that torrid sales growth this year. Many of the most enthusiastic early adopters have already bought plug-in vehicles, while potential buyers are put off by high sticker prices and the relative scarcity of charging stations. Companies like Tesla are already warning that sales growth will probably slow in the near term.

Still, if electric vehicle sales only rise between 30 and 40 percent in 2024, a noticeable slowdown from last year, that would be in line with the law’s emissions targets, the analysis found.

The picture for renewable power is mixed, however. Last year, the United States added a record 32.3 gigawatts of electric capacity to the grid from solar panels, wind turbines and batteries. In many parts of the country, the tax credits provided by the law are making renewable sources of electricity cheaper to build than more polluting sources like coal or natural gas.

But when the Inflation Reduction Act passed, analysts had projected that the United States would add an average of 46 to 79 gigawatts of carbon-free electricity to the grid annually in 2023 and 2024. There are projects pending this year that would deliver about 60 gigawatts but not all of them are expected to be completed on time, the analysis said. That means the country will be behind schedule in deploying new clean electricity sources.

The biggest obstacles facing renewable electricity are logistical, the report said. Wind and solar projects are facing lengthy waits to connect to the nation’s clogged electric grids, and it can take a decade or more to get permits for new high-voltage transmission lines and build them. In many parts of the country, new wind or solar farms are facing opposition from local residents. Plans for offshore wind farms have been bogged down by snarled supply chains and shipping restrictions.

These obstacles could pose an even bigger challenge over time. To meet the law’s expected emissions reductions, the nation would need to add roughly 70 to 126 gigawatts of renewable electricity capacity each year between 2025 and 2030 — a staggering increase from today’s levels, the analysis found. Without major changes to permitting and transmission, neither of which were addressed by the Inflation Reduction Act, those numbers could prove unattainable.

“Tackling these non-cost barriers will be critical,” the analysis says, for the law “to achieve its full clean energy deployment and emissions reduction potential.”

Separately, the Inflation Reduction Act also provided hefty tax credits to companies that manufacture batteries, solar panels, wind turbines and other technologies in the United States rather than abroad. That provision has proved popular: Companies invested $44 billion last year in domestic clean-energy manufacturing, with more planned in the years ahead.

Other aspects of the law will take longer to have an impact. There are tax credits for businesses that build advanced nuclear reactors or create hydrogen fuels using renewable electricity or add devices to factories that capture carbon dioxide emissions and bury them underground. While multiple companies are developing such projects in the United States, none have been built yet.

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