What Impact Will the IRA Have on Consumer Energy Costs?

The Inflation Reduction Act provides hundreds of billions of dollars’ worth of incentives for clean energy, and is a key part of the U.S.’s effort to reduce its greenhouse gas emissions. New research from Resources for the Future examines the extent to which the IRA may in fact incentivize the development of wind and solar power, and contribute to the Biden Administration’s goal of achieving 80% clean energy by the end of this decade.

Dallas Burtraw, a senior fellow with Resources for the Future, discusses the IRA’s potential to accelerate clean energy development, and its financial costs, or benefits, to consumers. Burtraw also explores the new law’s expected environmental and health impacts, and potential barriers that may limit the IRA’s ability to realize the full scope of expected benefits.

Full Transcript

Andy Stone: Welcome to the Energy Policy Now podcast from the Kleinman Center for Energy Policy at the University of Pennsylvania. I’m Andy Stone. In August, President Biden signed into law the Inflation Reduction Act, which includes hundreds of billions of dollars worth of incentives for clean energy and is a key part of the US’s effort to reduce its greenhouse gas emissions. On today’s podcast, we’re going to explore how much the IRA might, in fact, drive down emissions this decade, and at what financial cost or benefit to consumers.

My guest is Dallas Burtraw, an economist and a Senior Fellow with Resources for the Future. Earlier this month, Dallas and colleagues published research that projects the economic, environmental, and health impacts of the IRA to the year 2030. In the podcast, we’ll discuss these projected outcomes and look at the assumptions driving them. We’ll also look at potential barriers that may limit the IRA’s ability to drive clean energy growth. Dallas, welcome back to the podcast.

Dallas Burtraw: Thanks, Andy. Good to be here.

Stone: Yes, you were with us about three years ago, talking about carbon pricing. It’s a different topic today, but it’s all pretty well interconnected. I wonder if you could get us started here by framing the significance of the IRA as a piece of energy and climate legislation, and now obviously law.

Burtraw: Well, I don’t want to have anybody drive off the road when I say this, but I firmly believe this is the most important piece of environmental legislation in the U.S. since the 1970 Clean Air Act. And that awareness is just, I think, dawning on people now as the breadth and magnitude of the IRA comes into view. But there are a number of uncertainties about whether its full impact will be realized. It’s important to know that it emphasizes a carrot approach, rather than sticks, as it is entirely constructed of incentives and generous incentives for clean energy and related outcomes. It was passed as part of budget reconciliation, if you remember the whole narrative over the last 24 months about Biden’s climate proposals. They were unable to achieve the 60 votes necessary in the U.S. Senate to do what would look like normal policy coming out of a set of committee hearings and structure. So instead, this is enacted through budget reconciliation, which means that it has to be about tax and spend, rather than about specific policy goals. But of course, those tax and spend provisions are carefully and extensively aligned to achieve policy-related outcomes.

Now it’s a really comprehensive package, including many incentives outside the power sector for vehicles, fuels, and industry. However, the heart of it is in the electric power sector, and I’ll say that it has got funding through 2032, which as you say, Andy is about—funding for clean energy is maybe 270 billion dollars, and the total package is 380 billion dollars, perhaps. But that funding is not capped, and it continues until the electricity sector emissions fall to 25% of 2022 levels, which our modeling and several other models indicate is unlikely until later in the next decade. So in other words, the funding is not capped on an annual basis once the legislation takes effect, and it could continue well past 2032.

Stone: You recently published a paper on the topic, which is called “Beyond Clean Energy.” That’s the title of the paper. And in it, you and your fellow researchers model the financial and environmental impact of the IRA in terms of cost to consumers and the reduction of several types of emissions. Overall, what did you find?

Burtraw: Overall the focus is, of course, about emission reductions. There were other provisions in the IRA which are important but lesser—for example, prescription drugs. We’re not going to talk about that today. The primary attention is around the climate and energy-related goals. We find that the IRA will take emissions to about—you know, there’s a range because we do different scenarios that we can discuss—but to about 65 or 66% below 2005 level by 2030.

Stone: And those are specific to the electricity sector; those are not economy-wide.

Burtraw: Yes, thank you; and that’s correct. There’s also substantial reduction in sulfur dioxide emissions by quite a range, but from one-third to two-thirds from 2022 levels. And this would end up at a level of sulfur dioxide emissions that are just 4 to 6% of what they were in 2005. This is noteworthy, as we move on to talk about climate because over most of my career, sulfur dioxide emissions represented the most prominent threat to environmental and public health. And now in the power sector, since 2005, they’ve been reduced to just roughly 5%. They will be reduced to just roughly 5% of what they were. And NOx emissions are going to fall by a comparable magnitude within the power sector.

But it is called the Inflation Reduction Act, so what is it doing to prices? The electricity prices we model are expected to fall by 6 to 7% on a national average basis over the decade. I get a little bit nervous when looking at such a striking result coming out of a model, but I am comforted to note that just last week, Ameren, for example, suggested that the IRA would lead to a reduction in its retail prices by 4.5%, and that’s just at a first glance in terms of how Ameren’s resource plans would be affected by the IRA.

These reductions in electricity prices are expected to promote electrification of buildings and transportation, yielding additional emissions reductions beyond those that we represent in our model in the power sector.

Stone: I think it’s interesting here, one other important bit of data or findings from the report is that clean energy due to the IRA would rise to be about 69 to 75%—that’s the range you give—of electricity generation. That compares with the 80% goal that President Biden had set out. They’re pretty close there, it sounds like.

Burtraw: It’s pretty close. That 69 to 75% compares to what we think would be 56% in the no-policy baseline and 38% today. So you can see that there is a general trend towards clean energy, and that has to do with the precipitous reduction in cost for solar and wind and storage. But this will basically double, or more than double, the rate at which clean energy is entering the power system. And that 80% goal that Biden articulated roughly aligns with an 80% reduction in emissions from 2005 levels in the power sector. And that represents what would be needed from the electricity sector if the U.S. economy were to achieve the U.S. pledge under the Paris Agreement.

So it’s just a coincidence that those two numbers are so close together, but about 80% clean electricity by 2030 corresponds to roughly 80% reductions in emissions from 2005 levels.

Stone: There are some pretty dramatic numbers here, and I know as an economist sometimes you’re a bit wary of dramatic numbers, as you just mentioned on the 6 to 7% reduction in electricity prices, but it really struck me that with the IRA, solar generation would grow by 891% from where it is currently by 2030, under what you’ve described as the central modeling case, versus 378% for the no-policy scenario. That’s a big jump. Did I catch that correctly?

Burtraw: You caught that correctly, but it is a big jump even in the no-policy scenario. In other words, renewables are becoming ever more prominent, and the Inflation Reduction Act really gives that a booster rocket in terms of the introduction to the power sector. But still, the IRA does not achieve Biden’s goals, as you hinted at the outset a minute ago. It does put the electricity sector and presumably the whole U.S. economy within striking distance, but the IRA is not going to get all the way to achieving U.S. goals under the Paris Agreement. Now, IRA provides—the primary way is promoting investment through either a production tax credit or an investment tax credit. A production tax credit gives credit on taxes, based on production of renewable energy that comes onto the grid. The investment tax credit is made at the time at which investments occur. And any individual project has the option to choose whether to claim the production tax credit or the investment tax credit.

Interestingly, we think that the projects are going to choose the production tax credit because technology costs are falling, especially for solar. So if it’s 30% of the costs that are returned as a tax credit for investment, then the basis of that is falling over time, then the actual payment from the government is reduced as technology improves. So the production tax credit is stable, and these are, just for those who are experts in power and these numbers still mean something, the production tax credit starts out at 25 dollars per megawatt hour, in current 2022-year dollars. And the investment tax credit is 30% of the investment for new clean energy and resources. And then there are bonus provisions which encourage economic development and adjust energy transition. It can ratchet those up to 30 dollars per megawatt hour on a production tax credit and 50% of the investment cost, if one chooses the investment tax credit.

Now what is really going to be realized, as you suggested earlier, Andy, this also remains uncertain because unlike a policy-driven piece of legislation which says, “This is a target that’s legally enforceable. This is what has to happen,” this is all carrots. And the question is: Is the donkey going to follow the carrots? So electricity demand is very uncertain, especially given the drive towards electrification, which could increase electricity demand, while there are also incentives for energy efficiency. Natural gas price variability is very substantial, and we found that to be a very important factor in shaping the future of the power sector.

Then there are other important provisions in the IRA—really very many other important provisions in the IRA affecting the power sector, including the Greenhouse Gas Reduction Fund and a Green Bank of 20 billion dollars, which is expected to leverage 9-fold as much private sector capital to make investments in clean energy. Block grants to states and other funds from local governments and even civil organizations to become involved in energy planning in their communities. So how all these things actually take effect is going to be—we’re going to have to watch it unfold over the course of the decade.

Stone: This brings the next question I want to ask you. And per the modeling in the report, retail electricity prices will fall, as you’ve said, around 6 to 8% versus the baseline, which is the baseline established by the Energy Information Administration in its Annual Energy Outlook. These prices will fall, despite the fact that massive investment in new clean energy infrastructure is going to be needed. Can you walk us through the balance of factors that lead to the net reduction in electricity prices, again given that large infrastructure investment that’s going to be needed?

Burtraw: Yes, there’s one slight course correction, I would say, in terms of what you said, Andy. It’s correct that we rely on the Annual Energy Outlook from the Energy Information Administration to calibrate our model. But we also have updated information to account, for example, for the precipitous increase in natural gas prices associated with the Ukraine War, et cetera. And so we have updated fuel prices that are informed by futures prices in the model. And so when I say, “Compared to the no-policy outcome,” it’s a no-policy outcome that is solved within our model, so it’s under a consistent set of technology and fuel price assumptions going forward.

Now these incentives are driving substantial investments, and the major outcome of interest to us is the important cost shift that is realized from electricity ratepayers to taxpayers. So a takeaway from this conversation—this is the main point for those involved in policy to really pay attention to. This 6 or 7% reduction in electricity prices results from a variety of outcomes. We account for changes in investment costs and fuel savings and O&M, and then system costs also include the tax credits, and these changes are passed through to retail electricity customers. We assume that households enjoy those directly. But also, then, businesses enjoy cost savings that we assume are passed through to households in proportion to expenditures—for example, on big-screen televisions or toasters.

So consumers see direct reductions in electricity at the household level and also changes in the costs of goods and services. The largest portion of expenditure on energy and electricity is in lower-income households. So by reducing the price of electricity, this is inherently progressive by reducing the burden of energy for low-income households. And this is being paid for by an increase in the corporate income tax. Primarily, the owners of capital are in the upper-income brackets. The literature suggests that about 75% of the corporate income tax falls on owners of capital, and 25% falls on labor. We represent it just that way in our model, in terms of impacts on sources of income.

And so it’s like a double-sided progressive policy, in that the reduction in rates is progressive. The tax system has inherent, at least modest, progressive characteristics, and by shifting from rates to taxes, we get a generally progressive outcome. It’s also interesting that this may have an efficiency benefit. And the efficiency benefit has to do with the observation by Jim Bushnell and Severin Borenstein and others—Meredith Fowlie in a different paper—that in many parts of the country, electricity is priced too high compared to the marginal social costs of providing electricity, including the environmental costs associated with electricity. So that is, what are the costs for society of delivering electricity services? And we see that electricity prices in many parts of the country are too high, and especially in those regions of the country where there’s a relatively clean electricity grid.

So this presents a barrier to decarbonization and a barrier to electrification of other parts of the economy. So there’s potentially this important efficiency gain of the cost shift that’s being made from repairs to taxpayers. And in terms of magnitude, the net savings by group we forecast is about—accounting for all these different kinds of savings and additional costs to the tax system—is about 123 dollars in savings for the lowest income quintile per household per year, and an increase for the top quintile of about 1,000 dollars per year.

Stone: Now that’s really interesting. So again, just to reiterate what you just said: Lower income households will save about 100 dollars, 123 dollars, I think you have modeled here, as you just said, per year on their household costs. Top income groups will be paying more as a result of the IRA. That’s correct.

Burtraw: That’s correct. That’s exactly what I’m saying, yeah. And so the bottom three income quintiles all see comparable savings, substantial savings. And then it’s the fifth income quintile or the top 20% of households in the country that bear a major portion of the burden of the IRA.

Stone: So in the modeling, I want to ask: Do you include the cost of electric grid expansion in all this? Because we can have all the expectations of new wind and solar, but if those cannot be interconnected to a grid that’s really designed to handle all that intermittent energy, it’s not going to go anywhere. Are those costs included?

Burtraw: Well, for the most part, yes, but not entirely. Transmission costs involve transmission losses when transmitting power over power lines, and the cost of construction of building the line. We include the transmission losses in the model and the cost of the existing transmission for purposes of cost recovery of what’s in place now. We do not include the cost of build-out of new transmission. Overall, transmission is about 11% of the delivered cost of electricity to end-use. And as we get towards the end of the decade, into the next decade, expanding the transmission grid is important for making it possible to, say, deliver the energy from wind resources to urban areas. So there will be a need for important investment in transmission. Some of that is supported by the Infrastructure Bill, which is different legislation. Some of it is by loan guarantees provided in the IRA. The majority of it is going to have to come from private capital, so that will ultimately be an additional cost that we haven’t represented.

I would say that in our defense, if you will, that the issue for transmission and distribution costs isn’t so much about financing, and it doesn’t affect the overall assessment in the model, but it is really important with respect to the question of siting. How will transmission and distribution be sited going forward? Will it be sited? That becomes one of the uncertainties and one of the barriers to full realization of adjustments under the IRA.

Stone: Well, that’s a really important point that I wanted to ask about, as well. So obviously there are some potential hurdles to this. One is transmission siting, new generation interconnection, and most of the new generation that’s lining up to interconnect to the electric grid these days is renewables. So it’s hard to predict that, but can you give us a little bit more insight into what you think the actual impact may be on achieving the outcomes of the IRA?

Burtraw: There are regulations for every element of the IRA, rules and regulations to implement the IRA are still to be written. And agencies in Washington are seeking comments. I invite listeners to engage in that if you have any area of expertise in any of the many facets that are going to be touched by the IRA. And while siting of transmission and distribution is important, I think the primary obstacle to full realization of the impact of the IRA is actually going to occur at the state and local level. And that has to do with permitting process and land use decisions that already tangle up the efforts to get new wind and solar resources in place—as well as other sources of clean energy because the IRA is technology-neutral, meaning that, for example, if someone is going to come in and build a new nuclear plant or even geothermal, which has de minimis greenhouse gas emission reductions if the cap or the measurement, the metric of the IRA enables geothermal to qualify.

So it’s technology-neutral, but getting any of these projects sited and operative is a major barrier to developing clean energy. And that’s getting played out on a state and local level generally. That’s the kind of wildcard that’s going to have the greatest effect on implementing the IRA. Take this a step further in terms of how the IRA is going to change the structure of the industry, you feel that the industry already, the business model, is being shaken by the precipitous decline in renewable costs, as I mentioned. And the investments under the IRA in renewables and potentially in transmission will substitute for new investment in gas and possibly new investment in gas pipelines.

So the business models within the utility sector are also going to be challenged. The IRA is a carrot approach and does not employ any sticks. So this means that it does not differentiate between the emitting technologies. In other words, it’s not beneficial for fossil fuels generally because it provides huge rewards for clean energy. But within the class of fossil fuel technologies—primarily coal and natural gas—it is actually natural gas that is most impacted by the policy. Renewables are crowding out what otherwise might be new investments in natural gas. And consequently, coal’s share of fossil fuel generation actually goes up as a result, even as overall fossil fuel generation goes down under the IRA.

Carbon tax, as we talked about three years ago, Andy, in terms of carbon price, in terms of how it might affect outcomes in the power sector, it would weigh about twice as heavily on coal as gas. But the IRA does not do that. So consequently, one way to criticize the IRA is to notice that this failure to include any sticks, that is to try to provide a disincentive for generation from high-emitting technologies undermines to some extent the cost-effectiveness of the overall policy. But it is what it is because it was done through budget reconciliation, which means it’s all about incentives. It’s not about any sticks.

Stone: There are a couple of points here I want to make. Going back for just a moment to the issue of interconnection of new generation, as well as development of the grid, it’s probably worth noting here that the FERC, the Federal Energy Regulatory Commission, is working hard looking at solutions to the challenge of interconnection and regional grid expansion at this point. If they sort it out, obviously, this would be, I guess, good for the IRA. But again, as you also mentioned, you’ve got to get the states to play game here, and that’s always going to be a challenge.

Regarding the issue of natural gas that you just mentioned, an interesting thing that I gleaned from reading the report is that when natural gas prices are high, the reduction in emissions from the IRA, as you model them, are actually less. And that talks again to the interaction between coal and gas and renewables. And I wonder if you can tell us a little bit more about again, how that interaction of gas prices, or the phenomenon of volatile gas prices can impact the ability of the IRA to reduce emissions by the end of the decade.

Burtraw: Yes, that’s a really helpful question. So just if natural gas prices go up, one might expect a greater incentive to invest in renewables.

Stone: That’s exactly what I was thinking, yes.

Burtraw: Yes, but that’s not the way we’ve asked the question in this report. We assume that changes in gas prices are secular trends having to do with other global phenomena, such as the war in Ukraine. So when we say, “What happens under a high natural gas price scenario?”—we’re saying that compared to a no-policy case. So assuming there’s going to be high natural gas prices in the future, what is the impact of the IRA compared to not having the IRA? And we contrast that with a lower natural gas price future and what is the impact of the IRA versus not having the IRA?

In the low natural gas price future, you might see more build-out of natural gas, ceteris paribus, but the IRA, the incentives for the IRA then become more important by crowding out those new investments in natural gas and bringing in more investments in renewables.

Stone: Obviously we’re focusing here on the ITC and PTC for wind and solar primarily. But are there other incentives in the IRA that maybe are or are not included in your model that are important to consider here?

Burtraw: There are. There are very many, Andy. That’s what’s just jaw-dropping about the IRA. But one that is included in our model is an 85-dollar per ton credit for carbon capture and storage. This translates into support for carbon capture and storage at a coal plant, for example, at about 85 dollars per megawatt hour, for those who are familiar with the vocabulary here. But this is a really big support for carbon capture and storage. It’s probably not enough to totally offset the cost of carbon capture and storage, but it’s really biting off the lion’s share of those costs. And it’s really striking, even on an international stage, people are looking at that and saying, “Wow.” And we represent that in our model, and that is enough for the modeled one to build, and quite noticeable amount of carbon capture and storage by early in the next decade, both from natural gas and coal plants.

But then there are some really important things that are outside the power sector that are also really important wild cards but really open up possibilities for the future. Without being too long-winded about it, these include a hydrogen production tax credit and credits for clean fuel development. There’s a methane fee. And then many listeners are going to be interested in the support for electric vehicles, which is up to 7,500 dollars per new electric vehicle and 4,500 dollars for a used electric vehicle. These are not immediately available. They are sort of phased in. They’re not immediately available because of a notion that demand is currently already outstripping supply for electric vehicles. And I think Senator Manchin’s logic is, “Why pay people for something that they were going to do, anyway?”

So in a couple of years, the EV incentives do kick in, but there is an important domestic content in order to be eligible for those. That is, that the batteries and other critical components—assembly of the electric vehicles—has to occur in North America. That includes Mexico, the U.S., and Canada. And this has attracted the irritation, to be sure, of some auto manufacturers abroad, although it has also caused Volkswagen and others to re-up their commitment to building factories in the U.S., which, depending on your perspective, could be a very good thing.

And also that is means-tested, so I think it’s a 250,000-dollar per household cutoff for eligibility for the full tax credit, and there’s more. But my point is that there’s also quite a bit of things outside the power sector. But the thing that’s most tangible, that’s gotten the most attention are these investments that are going to occur within the power sector.

Stone: And of course the IRA doesn’t exist within a vacuum. There has been other energy-related legislation that’s been passed over the last year, year-plus. I wonder if you could tell us where the IRA fits into this larger bucket of rules, including the bipartisan Infrastructure Bill, et cetera, in advancing decarbonizing the economy?

Burtraw: I’m so glad you asked that, Andy. Listeners may remember that over the last two years, there’s been a lot of talk about Biden’s original Build Back Better proposal. And there were several climate and energy-related features of that proposal which never passed under that label, but all these—at least the climate and energy-related features—have pretty much all been funded now, but in separate parts. So there’s the infrastructure law you mentioned, 1.2 trillion over ten years, the biggest infrastructure bill in U.S. history. That’s not all climate, but it does include support for electric vehicle charging and public transportation and high-speed internet and high-vision hubs and spending on transmission and support for existing nuclear power plants, so that they don’t retire and in order to continue to realize their climate benefits. There is a Justice40 policy provision that came right out of the blocks in the Biden administration that influences all this stuff. It puts a priority on projects and spending. A couple of specific examples are spending under the Infrastructure Bill to repair communities that have been split by highways historically, typically low-income, disadvantaged communities. Also the priority build-out for electric vehicle charging in areas that are not simply constituted by upper and middle-income households. So making sure that rural communities and low-income urban communities also have EV charging structures, and that’s where the support is going through grants to states.

There’s the CHIPS Semiconductor Act that deserves more than just a small mention. I’m not going to dwell on it, but amping up the production of semiconductors was crucial to the electric vehicle industry and to a bunch of electrification projects. And there are other regulations that are in the pipeline now, which we expect from the EPA for vehicle standards and industry performance standards, et cetera. And all these things, all constituted, represent really a full accomplishment of the Biden climate ambition, even though people don’t really recognize it because it has come through in parts. What is missing from the Build Back Better is that there’s no forcing function on the outcome. It’s all carrots. There are no sticks, as I mentioned previously. So consequently, we lose some of the cost-effectiveness, but to reverse that will require a different Congress. But for now, this array of investments, incentivized under the IRA are investments that would have had to happen anyway, in order to achieve decarbonization.

So it’s not like money wasted, but there’s still a missing piece in the U.S. climate agenda, obviously, and that is to close that gap to achieve the Biden goals. And to an economist such as myself, that’s best achieved through the introduction of some type of carbon pricing. But I think with the IRA in place, the magnitude of the carbon price that’s necessary to drive that last bit and prove the cost-effectiveness of all these investments is now much smaller than previously when we estimated that it had to be. And meanwhile, the IRA has re-established the U.S. footing on the international stage as a legitimate partner, again addressing climate change. And it has brought many of our international partners, especially in Europe, back to the table in terms of speaking with U.S. and international negotiations. And it has given the U.S. a new prestige going into COP 27 next month.

Stone: Before we finish up, I don’t want to overlook one other key part of the research, and that is your look at the human health impacts of the IRA. You modeled these impacts. What were the key findings here?

Burtraw: Right, indeed. We look at the air quality-related health outcomes associated with fossil fuel use in the power sector. We do this on a national basis by mapping from county centroid to county centroid for 3,000 counties, the change in emissions that are going to occur within that county, and then what are the downwind effects on changes in their atmosphere concentrations. We look at changes in human health, and then we also monetize those changes in human health, using the same practice that the EPA does and its benefit/cost analysis for regulatory impact assessments. And we find overall that a reduction of more than 40% of the negative public health outcomes associated with pollution from the power sector will be reduced due to the IRA—over 40% improvement.

Now these improvements are dispersed broadly across the population, broadly across income groups. They are concentrated in the heartland, the middle part of the country, so on a regional basis. And that’s because that’s the region of the country where you see the greatest amount of coal generation currently. But when we add this monetized value of changes in health outcomes and the monetized value of climate benefits, the so-called “social costs of carbon,” the reduction in electricity prices that are expected and the increase in taxes to pay for all this—adding all those together, we calculate that net benefits per average household is about 1,000 dollars per household under the IRA.

Stone: So a final question for you here, and I kind of already asked it a little bit earlier. But I want to come back to overtime and pin you on this one. Given the challenges that we talked about, building new transmission lines, interconnection problems, all those challenges, all that—to what extent are you expecting us to see the full economic and environmental benefits that could come out of the IRA?

Burtraw: Yes, you’re asking a really subjective question here, and I don’t want to be negative. But I will say that there are some important obstacles here, some important challenges. So our modeling, I think, is straightforward and very reasonable with lots of these constraints in place and recognized and appropriate adjustments made. But still, until the bird is in the hand, you don’t really know you have it. And I think that there are challenges, especially at the state and local level, to realizing the ambitions of build-out of renewable energy under the IRA.

But on the other hand, the calculus has changed due to sort of the federalist nature of the U.S. system, in that the federal government has put all this money on the table, and it’s there for businesses and investors at the state and local level to take advantage of. And so it puts them in a situation of advocating strongly for state governments to resolve some of the bottlenecks that have held up the ability to build out rapidly the clean energy infrastructure.

And that’s a really unusual, yet exciting political economy dynamic. But making predictions, Andy, about how that’s actually going to play out—whoa, that’s really uncertain. So I have to offer caution in the sense that like, “This isn’t a done deal.” A lot of things still have to happen in order to realize the potential, but on the other hand, everything from up to 60 billion dollars of investments, just sort of enabling investments to block grants to states and things like that, plus the dynamic incentives that the IRA unleashes for investors in the investment community and for rate-payers to promote these investments makes it really an interesting policy development.

And as I say, I forecast that it’s the most important environmental outcome since the 1970 Clean Air Act.

Stone: Dallas, thank you very much for talking.

Burtraw: Thank you, Andy.

Stone: Today’s guest has been Dallas Burtraw, a Senior Fellow with Resources for the Future. Check out the Kleinman Center for Energy Policy website for more podcasts, research, and upcoming events. To keep up with the center, subscribe to our monthly newsletter on our website or follow us on Twitter. Our handle is @KleinmanEnergy. Thanks for listening to Energy Policy Now, and have a great day.