Axios Pro Exclusive Content

The IRA's climbing climate and energy costs

Illustration of a pipeline surrounded by money elements and abstract shapes.

Illustration: Gabriella Turrisi/Axios

The IRA's climate and renewable energy provisions are probably going to cost a lot more than initially expected.

Why it matters: As the law's one-year anniversary approaches, it's increasingly clear that the huge energy tax incentives might mean more domestic manufacturing and renewables deployment than Democrats dreamed of when they passed the law.

Details: The Congressional Budget Office and the Joint Committee on Taxation estimated last year that the climate and energy provisions would cost close to $400 billion.

What they're saying: "I take the CBO with a grain of salt much of the time," Sen. Martin Heinrich told Axios. "If it comes in substantially higher, I would view that as a positive because we need to turn the ship before it's 110 [degrees] in Washington, D.C., and 115 in Albuquerque."

Republicans argue that the IRA is runaway government spending. But as new project announcements come in every week, it also means a huge flow of private capital into the energy transition.

  • Credit Suisse estimated the total public and private spending from the IRA at $1.7 trillion, leaving the U.S. "well positioned to be the premier energy supplier for the world."
  • The IRA's tax credits "will attract a lot of private sector capital," Heinrich said. "And that's what we want."
Go deeper