The climate and energy sectors have been grappling with the potential of a Republican-led repeal of the Inflation Reduction Act since well before the election. As early as last summer, climate dollars were already being sidelined, thanks in large part to uncertainty over the fate of the IRA’s myriad tax credits.
Of course, when Donald Trump won in November, anxieties ramped up — though some were assuaged by evidence that red states have benefited the most from the landmark law. Certain Republicans, as some anticipated, have begun to step up to bat for IRA-backed projects in their districts. However, repealing major components of the law isn’t yet off the table.
Today, as states both blue and red feel the economic impact of federal funding freezes and legal chaos surrounding disbursements, a new report from Energy Innovation puts numbers on exactly how and where a repeal would have the most impact.
According to the report’s modeling, repealing federal clean energy tax credits and other IRA funding programs would increase consumer energy bills by over $6 billion annually nationwide by 2030, a number projected to grow to more than $9 billion by 2035. On a per-household basis, that works out to an average increase in energy costs of $48 per year by 2030, and $68 per year by 2035.
A repeal would cost nearly 790,000 jobs in 2030, the study found, and GDP would drop by more than $160 billion.
While every state stands to suffer economic damage in the IRA repeal modeling, a few key states stand out as having the most to lose.
In Texas, for example, roughly $17.17 billion has been invested in clean energy and transport projects since the passage of the IRA, bringing 26,500 new jobs. Over 600 new clean energy and transportation facilities have already begun development. A repeal of the law would cost the state not far more than even what the state has gained, however: over 115,000 jobs, and a $20.32 billion drop in GDP by 2035, according to Energy Innovation’s modeling. The average Texas household would see energy prices increase by $90 a year by 2030, or by more than $370 a year by 2035.
California, the country’s most populous state, could also lose big from an IRA repeal. Repealing federal funding and tax credits would reduce the state’s GDP by $29.67 billion, while California households would see increased energy costs of $180 per year by 2035.
Meanwhile, Florida would lose out on more than 40,000 jobs, with average household energy costs increasing by as much as $150 per year in 2035. And Pennsylvania and Georgia would both lose out on more than 28,000 jobs, and see household energy costs rise by $80 and $180 a year by 2035, respectively.
There is also, of course, an emissions impact. According to Energy Innovation modeling, repealing clean energy tax credits and funding under the IRA would increase air pollution, particularly from power plants, by nearly 530 million metric tons of carbon dioxide equivalent in the next decade — the equivalent of adding 116 million cars to the road.
