{
  "title": "Emissions Reduction, Fiscal Costs, and Macro Effects: A Model-based Assessment of IRA Climate Measures and Complementary Policies",
  "publication": "IMF Working Papers, February 9, 2024",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2024/02/09/emissions-reduction-fiscal-costs-and-macro-effects-a-model-based-assessment-of-ira-climate-544749",
  "canonical": "https://www.imf.org/en/publications/wp/issues/2024/02/09/emissions-reduction-fiscal-costs-and-macro-effects-a-model-based-assessment-of-ira-climate-544749",
  "overlayPath": "/en/publications/wp/issues/2024/02/09/emissions-reduction-fiscal-costs-and-macro-effects-a-model-based-assessment-of-ira-climate-544749/index.md",
  "summary": "The IMF’s Macroeconomic Model for the Energy Transition (GMMET) is applied to assess the climate-related measures in the U.S. 2022 Inflation Reduction Act (IRA).",
  "sections": [
    {
      "heading": "Summary findings",
      "content": "- The IMF’s Macroeconomic Model for the Energy Transition (GMMET) is applied to assess the climate-related measures in the U.S. 2022 Inflation Reduction Act (IRA).\n- Explicitly accounting for corporate income tax funding and assuming no permitting delays for energy-related investment, the IRA measures are expected to cut annual greenhouse gas emissions by 710 MMT by 2030.\n- Emission reductions are predominantly driven by more electricity generation from renewables combined with a rising share of electric vehicles.\n- Aggregate output and inflation are not impacted significantly under the baseline assumptions."
    },
    {
      "heading": "Emissions impact",
      "content": "- Expected annual greenhouse gas emissions reduction: 710 MMT by 2030.\n- Primary drivers: increased electricity generation from renewables; rising share of electric vehicles."
    },
    {
      "heading": "Fiscal costs and modelling scope",
      "content": "- Fiscal costs amount to about $700 billion through 2030.\n- An additional $120 billion of fixed grants and loans are noted as not modelled."
    },
    {
      "heading": "Permitting delays scenario",
      "content": "- In the presence of investment delays from permitting, emission cuts would be reduced by about a third."
    },
    {
      "heading": "Additional abatement opportunities and cost implications",
      "content": "- The IRA leaves room for sizable additional emission abatement at very low costs.\n- Targeted opportunities identified: electricity generation from coal and methane emissions from oil and gas industries."
    },
    {
      "heading": "Macro and sectoral effects",
      "content": "- Aggregate output: not impacted significantly under baseline assumptions.\n- Inflation: not impacted significantly under baseline assumptions.\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2024/02/09/emissions-reduction-fiscal-costs-and-macro-effects-a-model-based-assessment-of-ira-climate-544749"
    }
  ],
  "bullets": [
    "[Markdown version](/en/publications/wp/issues/2024/02/09/emissions-reduction-fiscal-costs-and-macro-effects-a-model-based-assessment-of-ira-climate-544749/index.md)",
    "[Structured JSON version](/en/publications/wp/issues/2024/02/09/emissions-reduction-fiscal-costs-and-macro-effects-a-model-based-assessment-of-ira-climate-544749/index.json)",
    "[Bundle manifest](/en/publications/wp/issues/2024/02/09/emissions-reduction-fiscal-costs-and-macro-effects-a-model-based-assessment-of-ira-climate-544749/bundle-manifest.json)",
    "Authors: Simon Voigts, Anne-Charlotte Paret",
    "Published: February 9, 2024",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9798400268786.001",
    "The IMF’s Macroeconomic Model for the Energy Transition (GMMET) is applied to assess the climate-related measures in the U.S. 2022 Inflation Reduction Act (IRA).",
    "Explicitly accounting for corporate income tax funding and assuming no permitting delays for energy-related investment, the IRA measures are expected to cut annual greenhouse gas emissions by 710 MMT by 2030.",
    "Emission reductions are predominantly driven by more electricity generation from renewables combined with a rising share of electric vehicles.",
    "Aggregate output and inflation are not impacted significantly under the baseline assumptions.",
    "Expected annual greenhouse gas emissions reduction: 710 MMT by 2030.",
    "Primary drivers: increased electricity generation from renewables; rising share of electric vehicles.",
    "Fiscal costs amount to about $700 billion through 2030.",
    "An additional $120 billion of fixed grants and loans are noted as not modelled.",
    "In the presence of investment delays from permitting, emission cuts would be reduced by about a third.",
    "The IRA leaves room for sizable additional emission abatement at very low costs.",
    "Targeted opportunities identified: electricity generation from coal and methane emissions from oil and gas industries.",
    "Aggregate output: not impacted significantly under baseline assumptions.",
    "Inflation: not impacted significantly under baseline assumptions.",
    "**Working Paper**"
  ],
  "related": [
    {
      "title": "Working Paper",
      "role": "paper",
      "sourceUrl": "https://www.imf.org/-/media/files/publications/wp/2024/english/wpiea2024024-print-pdf.pdf",
      "summary": {
        "path": "/-/media/files/publications/wp/2024/english/wpiea2024024-print-pdf.pdf.md",
        "mime": "text/markdown"
      },
      "binary": {
        "path": "/-/media/files/publications/wp/2024/english/wpiea2024024-print-pdf.pdf",
        "mime": "application/pdf"
      }
    }
  ],
  "alternates": {
    "markdown": "/en/publications/wp/issues/2024/02/09/emissions-reduction-fiscal-costs-and-macro-effects-a-model-based-assessment-of-ira-climate-544749/index.md",
    "json": "/en/publications/wp/issues/2024/02/09/emissions-reduction-fiscal-costs-and-macro-effects-a-model-based-assessment-of-ira-climate-544749/index.json",
    "bundleManifest": "/en/publications/wp/issues/2024/02/09/emissions-reduction-fiscal-costs-and-macro-effects-a-model-based-assessment-of-ira-climate-544749/bundle-manifest.json"
  },
  "generatedAtUtc": "2026-09-16T23:37:12.752Z"
}