Photo by POW Creative Alliance member Sara Robbins

When President Biden signed the Inflation Reduction Act (IRA) in August 2022, it was hailed as the most important climate law in US history. Since then, the IRA’s impact has only grown.

Initially, the Congressional Budget Office (CBO) estimated the set of incentives would amount to just under $400 billion in support for clean energy over 10 years. However, this was only an estimate because the main policy instrument was an uncapped tax credit. The CBO has since revised its estimate to double that, and banks have estimated it at three times the original, with over $1 trillion in spending to address climate change.

The IRA has grown because individuals, households, organizations, and companies are more willing to invest their money to be a part of the effort. Clearly, this isn’t an issue of the government’s deep state forcing people to use technologies that they don’t want. It’s dramatically the opposite. People and communities are more eager to adopt clean technologies than government analysts expected, and the IRA is helping them do just this.

Here’s a look at the IRA’s impact to date, 2 years after it was signed:

Incentives Driving Clean Energy Adoption: Creating incentives for the adoption of clean energy is at the core of the IRA, bringing energy and climate action to individuals, communities, and households. In 2023, $126 billion was invested through a mix of solar panels, home batteries, heat pumps, and electric vehicles. By far the biggest impact has been for electric vehicles, which grew by 16%, more than doubling its investments from a few years ago.

The industrial and energy sectors also benefited, investing $250 billion since the IRA began—a 34% increase. These projects have been distributed nationwide and include a mix of solar, wind, energy storage, hydrogen, and carbon removal. Solar energy received the most investment, with utility-scale solar more than doubling in the first five months of 2024 compared to last year.

Creating Clean Energy Equipment: The IRA goes beyond deploying clean energy. It’s also about establishing a domestic industrial base to produce clean energy equipment, like batteries and solar panels. These investments have grown rapidly, with $152 billion poured into clean energy development since the IRA’s inception—more than doubling from the previous two years. This has resulted in significant investments and new jobs around the country. Many of these projects are located in the Midwest and Southeast, with most of the IRA’s manufacturing funding projects in states that have voted Republican in recent elections, bolstering the durability of the policy. Battery production and electric vehicle components have led this investment.

Justice40 & Advancing Environmental Equity: A key part of the IRA aligns with the Biden Administration’s Executive Order 14008, “Tackling the Climate Crisis at Home and Abroad.” This includes “Justice40,” which aims to ensure that 40% of the benefits from laws like the IRA go to disadvantaged communities. Since many IRA programs became part of Justice40 in late 2023, it’s too early to see the full impact. However, one report found that 20% of the 500+ programs under Justice40 are clearly meeting goals.

Measuring the environmental justice outcomes of the IRA is crucial, as it reflects the IRA’s commitment to Justice40’s goals through its support of disadvantaged communities.

Measuring the IRA’s Impact on Emissions Reductions: As a climate change law, the IRA’s success will ultimately be judged by its effectiveness in reducing emissions. Models indicate that the IRA will help US emissions fall 40% below 2005 levels by 2030. While it’s still early, we have seen a positive trend, with 2023 carbon dioxide emissions in the US being 3 percent lower than 2022 levels, aligning with the 2030 goal.  

In just two years the IRA has made a significant impact on clean energy development in the US. This is evident in the surge of investments in clean energy manufacturing, the increase in electric vehicle adoption, the widespread use of solar energy, and the growth in battery storage, which supports higher levels of renewable electricity.

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