ERM was commissioned to enhance understanding of how the Inflation Reduction Act (IRA) may impact the business-as-usual power sector outlook in anticipation of Environmental Protection Agency proposed greenhouse gas (GHG) emissions standards for fossil fuel-fired power plants.

This report reviews seven key preliminary analyses of IRA implementation and compares and contrasts their projections of power sector emissions and resource mix to a case without federal GHG standards.

Key learnings from ERM’s review include:

  • All studies suggest the IRA will incentivize emissions reductions by supporting cleaner resources over conventional technologies.
  • The IRA could drive growth in clean resource deployment to account for 56-78% of generation in 2030 and 68-91% in 2040, compared to 37% in recent history.
  • Without the IRA, the power sector is on a path to achieve carbon dioxide (CO2) emissions reductions 47-59% below 2005 levels by 2030. Modeling suggests the IRA could help drive down emissions 58-81% below 2005 levels by 2030.
  • Absent additional policies, some modeling suggests emissions could increase once IRA credits begin to phase out.
  • The degree to which various resources will be deployed and at what time will depend on a number of uncertain factors reflected in the scenario modeling, such as technology costs, IRA implementation, and associated impact on load growth.
  • Transformational change to the power sector may only occur through sustained technology cost reductions over time and by surmounting real-world barriers not addressed directly by IRA or fully captured in the modeling, such as permitting procedures and infrastructure needs.