IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v15y2023i24p16562-d1294490.html

Simulating the Impact of the U.S. Inflation Reduction Act on State-Level CO 2 Emissions: An Integrated Assessment Model Approach

Author

Listed:
  • Tianye Wang

    (Engineering Management and Systems Engineering, The George Washington University, Washington, DC 20052, USA)

  • Ekundayo Shittu

    (Engineering Management and Systems Engineering, The George Washington University, Washington, DC 20052, USA)

Abstract

Climate change mitigation measures are often projected to reduce anthropogenic carbon dioxide concentrations. Yet, it seems there is ample evidence suggesting that we have a limited understanding of the impacts of these measures and their combinations. For example, the Inflation Reduction Act (IRA) enacted in the U.S. in 2022 contains significant provisions, such as the electric vehicle (EV) tax credits, to reduce CO 2 emissions. However, the impact of such provisions is not fully understood across the U.S., particularly in the context of their interactions with other macroeconomic systems. In this paper, we employ an Integrated Assessment Model (IAM), the Global Change Assessment Model (GCAM), to estimate the future CO 2 emissions in the U.S. GCAM is equipped to comprehensively characterize the interactions among different systems, e.g., energy, water, land use, and transportation. Thus, the use of GCAM-USA that has U.S. state-level resolution allows the projection of the impacts and consequences of major provisions in the IRA, i.e., EV tax credits and clean energy incentives. To compare the performance of these incentives and credits, a policy effectiveness index is used to evaluate the strength of the relationship between the achieved total CO 2 emissions and the overarching emission reduction costs. Our results show that the EV tax credits as stipulated in the IRA can only marginally reduce carbon emissions across the U.S. In fact, it may lead to negative impacts in some states. However, simultaneously combining the incentives and tax credits improves performance and outcomes better than the sum of the individual effects of the policies. This demonstrates that the whole is greater than the sum of the parts in this decarbonization approach. Our findings provide insights for policymakers with a recommendation that combining EV tax credits with clean energy incentives magnifies the intended impact of emission reduction.

Suggested Citation

  • Tianye Wang & Ekundayo Shittu, 2023. "Simulating the Impact of the U.S. Inflation Reduction Act on State-Level CO 2 Emissions: An Integrated Assessment Model Approach," Sustainability, MDPI, vol. 15(24), pages 1-16, December.
    • Handle: RePEc:gam:jsusta:v:15:y:2023:i:24:p:16562-:d:1294490
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/15/24/16562/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/15/24/16562/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Mishra, Gouri S. & Kyle, Page & Teter, Jacob & Morrison, Geoffrey M. & Kim, Son H. & Yeh, Sonia, 2013. "Transportation Module of Global Change Assessment Model (GCAM): Model Documentation- Version 1.0," Institute of Transportation Studies, Working Paper Series qt8nk2c96d, Institute of Transportation Studies, UC Davis.
    2. Son H. Kim & Mohamad Hejazi & Lu Liu & Katherine Calvin & Leon Clarke & Jae Edmonds & Page Kyle & Pralit Patel & Marshall Wise & Evan Davies, 2016. "Balancing global water availability and use at basin scale in an integrated assessment model," Climatic Change, Springer, vol. 136(2), pages 217-231, May.
    3. Wise, Marshall & Dooley, James & Luckow, Patrick & Calvin, Katherine & Kyle, Page, 2014. "Agriculture, land use, energy and carbon emission impacts of global biofuel mandates to mid-century," Applied Energy, Elsevier, vol. 114(C), pages 763-773.
    4. Kyle, Page & Kim, Son H., 2011. "Long-term implications of alternative light-duty vehicle technologies for global greenhouse gas emissions and primary energy demands," Energy Policy, Elsevier, vol. 39(5), pages 3012-3024, May.
    5. Shahbaz, Muhammad & Khraief, Naceur & Jemaa, Mohamed Mekki Ben, 2015. "On the causal nexus of road transport CO2 emissions and macroeconomic variables in Tunisia: Evidence from combined cointegration tests," Renewable and Sustainable Energy Reviews, Elsevier, vol. 51(C), pages 89-100.
    6. Ekundayo Shittu & Erin Baker, 2009. "A control model of policy uncertainty and energy R&D investments," International Journal of Global Energy Issues, Inderscience Enterprises Ltd, vol. 32(4), pages 307-327.
    7. Katherine Calvin & Marshall Wise & Leon Clarke & Jae Edmonds & Page Kyle & Patrick Luckow & Allison Thomson, 2013. "Implications of simultaneously mitigating and adapting to climate change: initial experiments using GCAM," Climatic Change, Springer, vol. 117(3), pages 545-560, April.
    8. Ou, Yang & Shi, Wenjing & Smith, Steven J. & Ledna, Catherine M. & West, J. Jason & Nolte, Christopher G. & Loughlin, Daniel H., 2018. "Estimating environmental co-benefits of U.S. low-carbon pathways using an integrated assessment model with state-level resolution," Applied Energy, Elsevier, vol. 216(C), pages 482-493.
    9. Ou, Yang & Kittner, Noah & Babaee, Samaneh & Smith, Steven J. & Nolte, Christopher G. & Loughlin, Daniel H., 2021. "Evaluating long-term emission impacts of large-scale electric vehicle deployment in the US using a human-Earth systems model," Applied Energy, Elsevier, vol. 300(C).
    10. John Weyant, 2017. "Some Contributions of Integrated Assessment Models of Global Climate Change," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 11(1), pages 115-137.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Runsen Zhang & Tatsuya Hanaoka, 2022. "Cross-cutting scenarios and strategies for designing decarbonization pathways in the transport sector toward carbon neutrality," Nature Communications, Nature, vol. 13(1), pages 1-10, December.
    2. Cassidy, Daniel & de Bruin, Kelly C, 2025. "Evaluating transport decarbonisation policies under carbon budget constraints: The role of carbon pricing and ICE bans," Papers WP815, Economic and Social Research Institute (ESRI).
    3. Shuanghui Bao & Osamu Nishiura & Shinichiro Fujimori & Ken Oshiro & Runsen Zhang, 2020. "Identification of Key Factors to Reduce Transport-Related Air Pollutants and CO 2 Emissions in Asia," Sustainability, MDPI, vol. 12(18), pages 1-15, September.
    4. Ajanovic, Amela & Haas, Reinhard, 2017. "The impact of energy policies in scenarios on GHG emission reduction in passenger car mobility in the EU-15," Renewable and Sustainable Energy Reviews, Elsevier, vol. 68(P2), pages 1088-1096.
    5. Zhang, Runsen & Hanaoka, Tatsuya & Liu, Jingyu & Li, Zhaoling & Sun, Lu, 2024. "Air pollution reduction co-benefits associated with low-carbon transport initiatives for carbon neutrality in China by 2060," Energy, Elsevier, vol. 313(C).
    6. Ou, Yang & Kittner, Noah & Babaee, Samaneh & Smith, Steven J. & Nolte, Christopher G. & Loughlin, Daniel H., 2021. "Evaluating long-term emission impacts of large-scale electric vehicle deployment in the US using a human-Earth systems model," Applied Energy, Elsevier, vol. 300(C).
    7. Seungho Jeon & Minyoung Roh & Almas Heshmati & Suduk Kim, 2020. "An Assessment of Corporate Average Fuel Economy Standards for Passenger Cars in South Korea," Energies, MDPI, vol. 13(17), pages 1-13, September.
    8. Ghaboulian Zare, Sara & Amirmoeini, Kamyar & Bahn, Olivier & Baker, Ryan C. & Mousseau, Normand & Neshat, Najmeh & Trépanier, Martin & Wang, Qianpu, 2025. "The role of hydrogen in integrated assessment models: A review of recent developments," Renewable and Sustainable Energy Reviews, Elsevier, vol. 215(C).
    9. Paladugula, Anantha Lakshmi & Kholod, Nazar & Chaturvedi, Vaibhav & Ghosh, Probal Pratap & Pal, Sarbojit & Clarke, Leon & Evans, Meredydd & Kyle, Page & Koti, Poonam Nagar & Parikh, Kirit & Qamar, Sha, 2018. "A multi-model assessment of energy and emissions for India's transportation sector through 2050," Energy Policy, Elsevier, vol. 116(C), pages 10-18.
    10. Yan, Shiyu & De Bruin, Kelly & Dennehy, Emer & Curtis, John, 2020. "A freight transport demand, energy and emission model with technological choices," Papers WP669, Economic and Social Research Institute (ESRI).
    11. Simone Speizer & Jay Fuhrman & Laura Aldrete Lopez & Mel George & Page Kyle & Seth Monteith & Haewon McJeon, 2024. "Integrated assessment modeling of a zero-emissions global transportation sector," Nature Communications, Nature, vol. 15(1), pages 1-15, December.
    12. Wigley, Tom M.L. & Hong, Sanghyun & Brook, Barry W., 2021. "Value-added diagnostics for the assessment and validation of integrated assessment models," Renewable and Sustainable Energy Reviews, Elsevier, vol. 152(C).
    13. Luca Gerotto & Paolo Pellizzari, 2021. "A replication of Pindyck’s willingness to pay: on the efforts required to obtain results," SN Business & Economics, Springer, vol. 1(5), pages 1-25, May.
    14. Amine Lahiani & Sinha Avik & Muhammad Shahbaz, 2018. "Renewable energy consumption, income, CO2 emissions and oil prices in G7 countries: The importance of asymmetries," Post-Print hal-03677233, HAL.
    15. Ye, Hui & Wu, Fei & Yan, Tiantian & Li, Zexuan & Zheng, Zhengnan & Zhou, Dequn & Wang, Qunwei, 2024. "Decarbonizing urban passenger transportation: Policy effectiveness and interactions," Energy, Elsevier, vol. 311(C).
    16. Kear, Sarah & Marangon Lima, Luana M. & Kittner, Noah, 2025. "Charging forward: A greenhouse gas emissions analysis of New York State's electric vehicle and clean energy goals," Energy Policy, Elsevier, vol. 201(C).
    17. Bahn, Olivier & Marcy, Mathilde & Vaillancourt, Kathleen & Waaub, Jean-Philippe, 2013. "Electrification of the Canadian road transportation sector: A 2050 outlook with TIMES-Canada," Energy Policy, Elsevier, vol. 62(C), pages 593-606.
    18. Coppens, Léo & Venmans, Frank, 2025. "The welfare properties of climate targets," Ecological Economics, Elsevier, vol. 228(C).
    19. Isaak Mengesha & Debraj Roy, 2025. "Carbon pricing drives critical transition to green growth," Nature Communications, Nature, vol. 16(1), pages 1-19, December.
    20. Lackner, Teresa & Fierro, Luca E. & Mellacher, Patrick, 2025. "Opinion dynamics meet agent-based climate economics: An integrated analysis of carbon taxation," Journal of Economic Behavior & Organization, Elsevier, vol. 229(C).

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jsusta:v:15:y:2023:i:24:p:16562-:d:1294490. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.