Why Biden's climate law needs a permitting boost
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The 2022 climate law advanced by Democrats will be hobbled unless policymakers greatly speed up permitting for low-carbon energy projects, International Monetary Fund analysts find.
Why it matters: The IMF scholars' February report — and a more recent related analysis — offer stark contrasts between the Inflation Reduction Act's effect under current approval timelines, and a successful acceleration.
Threat level: Should permitting delays persist until 2030, "the IRA-induced emission decline would be smaller by about a third," the paper states.
- "Permitting reform is therefore crucial to unlock the IRA's full potential."
- The report's power sector analysis looks at current permitting timelines averaging 4.5 years, and investment under a hypothetical reduction to 1.5 years starting last year.
What we're watching: There are still talks on Capitol Hill about a major permitting overhaul, but they face long odds.
The big picture: The paper's model of major IRA provisions shows the benefits outweighing the costs of the law, which steers hundreds of billions of dollars into decarbonization.
- Without permitting-related investment delays, renewables' share of the power mix rises almost 20 percentage points by 2030, at the expense of coal and gas.
- The law's overall impact on the macro-economy is "expansionary but very modest in size," their post states.
- Fiscal costs peak around 0.4% of gross domestic product late this decade and then decline.
The IRA alone covers around half the "implementation gap" of emissions curbs needed to meet President Biden's target of cutting greenhouse gases by 50% below 2005 levels by 2030.
- The authors see room for low-cost, complementary regulations on coal and methane that "substantially" close the gap.
The bottom line: The IRA needs help to fully blossom.
