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.
- But Credit Suisse pegged the federal spending at $800 billion.
- Goldman Sachs says it's more like $1.2 trillion.
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."
