Monday, October 16, 2023
Neil Mehrotra (Federal Reserve Bank of Minneapolis; Google Scholar) presents Economic Implications of the Climate Provisions of the Inflation Reduction Act (with John Bistline (Electric Power Research Institute) & Catherine Wolfram (MIT)) at Loyola-L.A. today as part of its Tax Policy Colloquium hosted by Katie Pratt:
The climate provisions of the Inflation Reduction Act (IRA) signed by President Biden in August could dramatically transform the energy sector of the U.S. economy, but the costs and the extent of new investment are highly uncertain, suggests a paper discussed at the Brookings Papers on Economic Activity (BPEA) conference on March 30, 2023.
“The problem IRA confronts is massive—re-orienting the way the U.S. and global economies produce and consume energy,” write the authors—John Bistline of the Electric Power Research Institute, Neil R. Mehrotra of the Federal Reserve Bank of Minneapolis, and Catherine Wolfram of Harvard University (on leave from the University of California-Berkeley). “IRA’s incentives span the entire energy sector, from producers of raw materials to end-use consumers, and will set considerable new forces in motion.”
They estimate the cost of the legislation could be as much as around $1 trillion, considerably higher than government estimates. But, according to the authors, even expenditures that high would be cost-effective when compared with the social cost of carbon (the economic costs, or damages, of emitting one additional ton of carbon dioxide into the atmosphere).
Commentators: Roberta Mann (Oregon) & Shi-Ling Hsu (Florida State; Google Scholar)