Addressing global warming in line with the Paris Agreement, the Inflation Reduction Act of 2022 (IRA) in the U.S. stands as a pivotal piece of climate legislation. It encompasses a broad array of programs, targeting clean energy, carbon management, electrification, efficiency, methane emission reduction, bolstering domestic supply chains, and addressing environmental justice. Understanding its complex impact on emissions and energy systems necessitates robust modeling. Analysis from nine advanced models suggests that the IRA might enable the U.S. to reduce emissions by 43 to 48% from 2005 levels by 2035. This multimodal approach provides critical data for international policymakers tracking Paris Agreement commitments and for U.S. policymakers aligning targets with necessary actions. Electric companies can use this analysis to determine the longevity of IRA incentives, linked to reducing electricity emissions. Additionally, it assists investors, technology developers, and companies in identifying market opportunities and planning for industry-specific developments.
The REPEAT Project’s revised analysis examines the climate and energy impacts of legislation passed by the 117th Congress, focusing on the Inflation Reduction Act of 2022 and the Infrastructure Investment and Jobs Act of 2021. Updated with the latest data from 2022, the analysis includes enhanced information on methane emissions in the oil, gas, agriculture, and forestry sectors. It presents three ‘Current Policies’ scenarios—’Conservative’, ‘Mid-range’, and ‘Optimistic’—to reflect uncertainties in law effectiveness and supply chain constraints. Additionally, it compares two benchmark scenarios: a ‘Frozen Policies’ scenario based on early 2021 policies, and a ‘Net-Zero Pathway’ scenario aligning with President Biden’s climate goals. The report covers greenhouse gas emissions, clean energy, electric vehicle deployment, fossil fuel use, and their impacts on energy costs, investment, employment, air pollution, and public health. The findings, which are approximate due to uncertainties, are updated regularly and have not been peer-reviewed.
This paper analyzes how the rise of wind and solar power impacts electricity market design, focusing on the shift towards carbon-free technologies. The growth of renewables is expected to increase price volatility daily and seasonally. Traditionally, market designs don’t consider volatility a problem. However, the potential for higher revenue volatility could increase investment costs in competitive markets, raising doubts about the sustainability of such models as renewables grow. We introduce a stochastic equilibrium model with financial entities providing hedging for generation capacity investments. This model uniquely calculates the cost of capital based on revenue volatility and market participants’ risk measures. Initial findings suggest that systems dominated by renewables might have lower investment risks due to less fuel price uncertainty. However, the risk reduction isn’t uniform across all resource types. The paper highlights that increased risk for peaking and backup resources could result in lower reliability in future modeled electricity systems.
To meet ambitious global decarbonization goals, electricity system planning and operations will change fundamentally. With increasing reliance on variable renewable energy resources, energy storage will probably play a critical accompanying role to help balance generation and consumption patterns. As grid planners, non-profit organizations, non-governmental organizations, policy makers, regulators and other key stakeholders commonly use capacity expansion modelling to inform energy policy and investment decisions, it is crucial that these processes capture the value of energy storage in energy-system decarbonization. Here we conduct an extensive review of literature on the representation of energy storage in capacity expansion modelling. We identify challenges related to enhancing modelling capabilities to inform decarbonization policies and electricity system investments, and to improve societal outcomes throughout the clean energy transition. We further identify corresponding research activities that can help overcome these challenges and conclude by highlighting tangible real-world outcomes that will result from pursuing these research activities.
The Inflation Reduction Act (IRA) in the U.S. offers significant incentives for low-carbon hydrogen and liquid fuels, impacting their cost-competitiveness by the early 2030s. This study examines the IRA’s effects on producing hydrogen and synthetic liquid fuel from natural gas, electricity, biomass, and ethanol. Findings show that with IRA credits, green hydrogen and blue hydrogen (from natural gas with carbon capture) become cost-competitive with traditional gray hydrogen. Biomass-derived hydrogen isn’t cost-competitive under current IRA provisions. However, if biomass gasification with carbon capture could claim IRA credits, it would be cheaper than gray hydrogen. For synthetic liquid fuels to compete with petroleum fuels, the IRA’s clean fuels credit, ending in 2027, requires extension or additional policy support. The subsidies per unit of CO2 mitigated for these pathways, except electricity-derived synthetic fuel, range from $65 to $384 per ton, within or below U.S. estimates of the social cost of carbon for 2030–2040.
The paper addresses the inefficiencies in large-scale energy systems planning models, traditionally based on linear programming (LP) or mixed integer linear programming (MILP). These models often struggle with tractability due to necessary abstractions that compromise result quality. To overcome this, the authors introduce a novel Benders decomposition approach. This method separates investment from operational decisions and decouples operational time steps using budgeting variables, enabling parallel processing of subproblems and accommodating policy constraints over time. This new approach significantly improves runtime, scaling linearly with temporal resolution, and shows marked runtime reductions for all MILP and some LP formulations, varying with problem size. Beyond energy, this algorithm is applicable to planning in domains like water, transportation, and production processes. Notably, it can tackle large-scale problems otherwise intractable. The enhanced resolution achieved through this method reduces structural uncertainty, thereby improving the accuracy of planning and investment recommendations.
The Inflation Reduction Act (IRA) notably reduces costs for utility-scale solar and wind projects in the U.S. by expanding tax credits. Utility-scale solar and wind costs can decrease by about 60% with the PTC bonus rate, and offshore wind costs by around 20%. The 45X Tax Credit makes U.S.-manufactured solar and wind components more competitive than imports, potentially cutting solar module costs by over 30%. This legislation could generate significant job growth in the renewable sector, with an estimated 1.3 million additional solar jobs and 250,000 wind jobs by 2035. Overall, utility-scale solar and wind jobs could reach 1.7 million and 520,000 respectively. The IRA will also increase wages in these sectors and boost the demand for construction materials like aluminum, cement, and steel, with demands in some cases exceeding current U.S. consumption and production levels by 2035.
Land-use conflicts may constrain the unprecedented rates of renewable energy deployment required to meet the decarbonization goals of the Inflation Reduction Act (IRA). This paper employs geospatially resolved data and a detailed electricity system capacity expansion model to generate 160 affordable, zero-carbon electricity supply portfolios for the American west and evaluates the land use impacts of each portfolio. Less than 4% of all sites suitable for solar development and 17% of all wind sites appear in this set of portfolios. Of these sites, 53% of solar and 85% of wind sites exhibit higher development risk and potential for land-related conflict. We thus find that clean electricity goals cannot be achieved affordably without substantial renewable development on sites with potential for land use conflict. However, this paper identifies significant flexibility across western U.S. states to site renewable energy or alter the composition of the electricity supply portfolio to ameliorate potential conflicts.
Achieving a net-zero emissions goal in the U.S. by mid-century requires a transformation of both the energy system and workforce. A new labor model, incorporating geospatial energy system projections, predicts that the transition could support 3 million direct energy jobs or $200 billion in wages annually in the next decade, growing to 4–8 million jobs or $200–500 billion in the 2040s. The energy workforce, 1.5% of the U.S. labor force in 2020, may increase to 2.5–5% by mid-century. The shift will cause boom-and-bust cycles in employment, with losses in fossil fuels balanced by gains in low-carbon sectors. The study also assesses workforce development needs, predicting larger scale changes than in past transitions. Factors like technology choice, infrastructure expansion, and political decisions will influence labor pathways, with most states potentially experiencing long-term workforce growth in energy, subject to regional variations and political bargaining.
The growing field of macro-energy systems (MES) brings together the interdisciplinary community of researchers studying the equitable and low-carbon future of humanity’s energy systems. As MES matures as a community of scholars, a coherent consensus about the key challenges and future directions of the field can be lacking. This paper is a response to this need. In this paper, we first discuss the primary critiques of model-based MES research that have emerged because MES was proposed as a way to unify related interdisciplinary research. We discuss these critiques and current efforts to address them by the coalescing MES community. We then outline future directions for growth motivated by these critiques. These research priorities include both best practices for the community and methodological improvements.