The White House Office of Management and Budget (OMB) on Tuesday released its first published analysis of avoided climate-related social costs resulting from a piece of legislation.
What Happened: The legislation analyzed was President Joe Biden’s $740 billion Inflation Reduction Act. The study found climate change will affect the U.S government ledger through the end of the century (2100) with long-range budget estimates showing that Federal revenues could be 7.1% lower annually, which translated to a nearly $2 trillion dollar loss.
The U.S. will need to lessen its reliance on unabated, carbon-intensive fossil fuel technologies and transition the economy to produce and use clean energy as well as other low-carbon goods and services in order to achieve Biden's ambitious goals of cutting carbon pollution from 2005 levels by at least half by 2030 and reducing greenhouse gas emissions (GHG) to net zero by 2050.
Why It Matters: The Inflation Reduction act sets out to achieve those goals. The analysis indicated that the bill will provide between $0.7 and $1.9 trillion in cumulative climate-related benefits through 2050 by investing in technologies such as solar, wind and clean hydrogen, together with provisions that encourage domestic sourcing of materials.
OMB found that the social benefits of the act could mitigate a number of harmful climate impacts including negative health impacts such as premature death, reducing property damage from rising sea levels and natural disasters, and cost reductions related to rising temperatures.
The study made it clear that the values given likely significantly underestimated the full public benefits of reducing greenhouse gas emissions because it doesn’t include climate damage categories such as ocean acidification (osteoporosis of the sea), and other limitations and assumptions.
Gernot Wagner, a climate economist who was not involved in OMB’s analysis told Axios that the study is indeed a vast underestimate of the true benefits of reducing carbon pollution because of the unquantified avoided climate risks and how clean technologies may be deployed.
"It does a straight-up accounting of the currently known effects. It doesn't — can't — project how this Act has the potential to revolutionize the clean-energy race more broadly," the climate economist said.
Benzinga previously reported that alternative energy and solar names like Plug Power Inc PLUG, FuelCell Energy Inc FCEL, Sunrun Inc RUN, First Solar, Inc. FSLR, and Sunnova Energy International Inc NOVA stand to benefit from the new bill as it is the most aggressive action to combat the climate crisis and improve American energy security in the nation’s history.
Through rebates and tax credits for energy-efficient home improvements, tax credits for rooftop solar systems and tax credits for electric vehicles, the law aims to cut annual energy expenses for families by hundreds of dollars. According to independent and official government forecasts, it will result in considerable reductions of GHG emissions. In 2030, total yearly emissions are expected to drop by nearly 40% below 2005 levels.
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