President Joe Biden signs The Inflation Reduction Act with (left to right) Sen. Joe Manchin, D-WV; Senate Majority Leader Chuck Schumer, D-NY; House Majority Whip James Clyburn, D-SC; Rep. Frank Pallone, D-NJ; and Rep. Kathy Catsor, D-FL, at the White House on Aug. 16, 2022.
Drew Angerer | Getty Images News | Getty Images
The Inflation Reduction Act, the most aggressive climate investment ever taken by Congress, could cut the social costs of climate change by up to $1.9 trillion by 2050, the White House said in an assessment on Tuesday.
The act, which the president signed into law earlier this month, will reduce costs related to rising temperatures, minimize property damage from sea level rise and other disasters and reduce health impacts such as premature death, the White House said.
The analysis by the Office of Management and Budget, which administers the federal budget, is the first published estimate of avoided climate-related social costs resulting from legislation. The social cost of carbon is an estimate of the economic costs that would occur from a future level of carbon pollution.
The bill’s climate provisions are projected to reduce the country’s carbon emissions by roughly 40% by 2030. Early in his presidency, President Joe Biden pledged to reduce U.S. emissions from 2005 levels at least in half by 2030 and achieve net-zero emissions by 2050.
In the shorter term, the analysis projects the bill will save between roughly $34 billion and $84 billion each year by the end of the decade. The White House assessment is based on models developed by the climate policy think tank Energy Innovation, Princeton University and the research firm Rhodium Group.
“The Inflation Reduction Act will help ease the burden that climate change imposes on the American public, strengthen our economy and reduce future financial risks to the Federal Government and to taxpayers,” Candace Vahlsing, the OMB’s associate director for climate, wrote in a blog post on Tuesday.
Climate-related disasters could cost the U.S. federal budget roughly $2 trillion per year — a 7.1% loss in annual revenue — by the end of the century, according to a separate White House assessment. That report warned the government could spend an additional $25 billion to $128 billion each year on financial risks related to climate change.
The bill provides $369 billion in funding for initiatives such as cutting emissions, manufacturing clean energy products and advancing environmental justice initiatives.