The White House said in an assessment Tuesday that the Inflation Reduction Act, the most aggressive climate investment ever by Congress, could cut the social cost of climate change by up to $1.9 trillion by 2050.
The White House said the act, which the president signed into law earlier this month, would reduce costs related to rising temperatures; reduce property damage and premature deaths from sea level rise and other disasters.
The analysis by the Office of Management and Budget is the first published estimate of the avoidance of climate-related social costs resulting from the legislation. The social cost of carbon is an estimate of the economic cost of future carbon pollution levels.
The bill’s climate provisions are projected to reduce carbon emissions by about 40% in the country by 2030. President Joe Biden at the start of his presidency pledged to reduce US emissions by at least half from 2005 levels by 2030 and achieve net-zero emissions by 2050.
In the short term, the analysis projects will save about $34 billion to $84 billion each year by the end of the decade. The White House’s assessment is based on models developed by climate policy think tank Energy Innovation, Princeton University, and research firm Rhodium Group.
“The Inflation Reduction Act will help reduce the burden of climate change on the American public, strengthen our economy and reduce future financial risks for the federal government and taxpayers,” said Candace Vahlsing, climate director. OMB’s associate director wrote in a blog post on Tuesday.
According to a separate White House assessment, climate-related disasters could cost the US federal budget about $2 trillion a year, 7.1% of annual revenues. That report warned that 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 reducing emissions, manufacturing clean energy products, and advancing environmental justice initiatives.