Analysis: US grid could be 90 percent carbon-free by 2030 with IRA tax credits

Under the provisions of the Inflation Reduction Act, the American electrical grid could achieve up to 90 percent of its electricity without carbon emissions by 2030, according to an analysis published Wednesday by the National Renewable Energy Laboratory (NREL).

The combination of the Inflation Reduction Act and the 2021 bipartisan infrastructure law could increase the share of clean electricity from 41 percent in 2022 to between 71 percent and 90 percent by 2030, the report found. Researchers analyzed a broad range of scenarios, accounting for unknown quantities such as future fuel prices and technology costs.

The main scenarios analyzed by the researchers included one in which no new federal or state policies are implemented that differ from those enacted as of September 2022, and another that includes several key Inflation Reduction Act and bipartisan infrastructure law provisions, including tax credits for carbon capture and storage, tax credits for clean electricity generation and the existing nuclear energy plant tax credit.

Much of the projected increase in carbon-free electricity would come in the form of solar and wind, which is projected to reach between 40 percent and 62 percent of total power generation by the end of the decade, according to the analysis.

The scenarios analyzed by NREL could cut annual carbon dioxide emissions from the power sector anywhere between 72 percent and 91 percent compared to their 2005 emissions and avert between $160 billion and $230 billion a year in climate-related damages, while averting $20 billion to $46 billion in health costs relating to nitrogen oxide pollution.

The analysis also identifies a number of factors that could be roadblocks to the best-case deployment scenario, including supply-chain issues and problems with siting and permitting.

The report follows a similar analysis released last year by Princeton University’s Zero Lab, which projected a more conservative level of 75 to 77 percent carbon-free electricity, largely due to its projections that proliferation of electric cars would cause a spike in demand for electricity from natural gas plants.