US would pay stiff economic price if Congress axes federal climate law tax credits: study
Non-partisan think tank Energy Innovation estimates such a move under pressure from President Donald Trump would cut GDP by $160bn and cost 790,000 jobs
Repealing US climate law tax credits would add $6bn to household energy bills, reduce national economic output by $160bn, and cost Americans nearly 790,000 jobs over the next five years, according to new numbers from non-partisan think tank Energy Innovation.
Former President Joe Biden signed the Inflation Reduction Act (IRA), his signature climate policy achievement, into law in August 2022. Congress narrowly passed it without support from Republicans.
IRA is under fire from successor Donald Trump, who wants Republicans, now in the majority, to rescind it with new legislation. He strongly favours development of fossil fuels over clean alternatives.
It’s unclear if, how, and when his party could attempt to do this, or if such a move would have enough votes for passage given some Republicans support the incentives.
Republicans have a 53-47 majority in the US Senate, where their caucus is more united on policy issues than in the House of Representatives, where the margin is 220-215.
That means if all House members are present and voting, and Democrats in the minority are unified, then Republicans could afford to lose two defectors and still win an otherwise 218-217 party-line vote.
Speaker Mike Johnson, the party’s leader in the House, has said it would not be possible to “blow up” IRA and instead, urged his party to use a “scalpel, not a sledgehammer” with the tax credits, noting some have helped the country.
On several occasions in the past nine months, up to 21 House Republicans have urged their caucus leaders to retain them.
Trump himself appears to support IRA subsidies for carbon capture and storage, certain energy-related manufacturing, critical minerals, geothermal, hydro, and nuclear, while loudly disparaging those for electric vehicles, solar, and wind.
Energy Innovation said its analysis shows that as of January this year, IRA has generated $600bn in private investment across roughly 750 domestic clean-energy projects, creating 406,000 American jobs. Biden signed the bill into law in August 2022.
About 77% of clean energy manufacturing and deployment investment are flowing to congressional districts represented by Republicans, according to the study.
It notes that Trump administration proposals to repeal federal policies, including freezing funding for IRA programmes, have stalled more than 60 new projects. This has cost the country more than 42,000 announced jobs and $57bn investment through February.
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