The New US Climate Law Will Reduce Carbon Emissions and Make Electricity Less Expensive, Economists Say

The federal government and states are in the process of implementing two laws — the Infrastructure Investment and Jobs Act and the Inflation Reduction Act — an investment of more than a trillion dollars to address climate change.

Electricity is a secondary energy source: it is generated through the conversion of primary energy sources such as natural gas, coal, solar, hydropower, and wind. Electricity’s versatility is not cost-free: a substantial amount of energy is lost in its generation and the cost of storage is high, compared with fuels such as coal, oil and natural gas. The economics of battery technology hold the key to expanded use of renewable sources to generate electricity.

Climate change is now a driver of the world’s economy. The impact is profound:

• Catastrophic weather events — hurricanes, floods, droughts, high temperatures — are more frequent and more extreme. The cost can be measured in both the initial damage caused and the longer-term impact on the economy.
• Vulnerable communities are increasing climate-related investments, hardening infrastructure and taking other protective measures.
• Investment in carbon capture and storage technologies is increasingly rapidly.
• Governments are making investments and crafting regulations to reduce emissions of carbon dioxide and other greenhouse gases. 

On top of all of this is the cost of uncertainty. As the Fourth National Climate Assessment, released in 2018 by the U.S. Global Change Research Program, says, “The assumption that current and future climate conditions will resemble the recent past is no longer valid.”