Will the Inflation Reduction Act save you money on your energy bills?
Posted On August 12, 2022
The Inflation Reduction Act will lower annual emissions and save households hundreds of dollars a year in annual energy costs, according to a report from a Princeton University’s Zero Lab.
The report estimates the Inflation Reduction Act will lower annual U.S. energy expenditures by a minimum of 4% by 2030, which the group said would amount to hundreds of dollars saved a year in household energy costs.
The legislation — passed by Senate Democrats Sunday on a party-line vote — provides funding for carbon capture technology, tax credits for electric vehicles and investments in hydrogen, wind and solar energy production, in addition to other climate, healthcare, and tax measures.
The report’s estimated savings don’t include possible changes to oil and gas prices due to decreased demand. The authors, however, believe the legislation could lower consumption of petroleum products in the U.S. and reduce crude oil prices by about 5% by 2030 to 2035.
The Princeton group’s report estimates the Inflation Reduction Act would reduce annual emissions to about 3.8 billion tons by 2030. That’s well below the roughly 5.6 million tons emitted in 2021, but just shy of a Biden administration target to cut emissions to 50% below their 2005 levels.
President Joe Biden said Sunday that the legislation was “the largest investment ever in combatting the existential crisis of climate change.”
“It addresses the climate crisis and strengthens our energy security, creating jobs manufacturing solar panels, wind turbines, and electric vehicles in America with American workers,” Biden said. “It lowers families’ energy costs by hundreds of dollars each year.”
While Democrats argue the bill will ease inflation, Republicans say it will make inflation worse. “Democrats have voted for a liberal wish list,” Sen. Mitt Romney, R-Utah, said in a statement. “Democrats called it an act to combat inflation. It does the opposite.”
Senate Minority Leader Mitch McConnell said the Inflation Reduction Act was proof Democrats don’t care about the priorities of middle-class families.
“[Democrats] have spent 18 months proving that,” McConnell said in a statement. “They just spent hundreds of billions of dollars to prove it again.”
The Congressional Budget Office estimated the Inflation Reduction Act would have a negligible effect on inflation in 2022 and 2023.
The bill heads next to the U.S. House and Speaker Nancy Pelosi said lawmakers will vote Friday.