Projecting Electricity-Sector Investments Under the Inflation Reduction Act: New Cost Assumptions and Interactions with EPA’s Greenhouse Gas Proposal
Abstract
Energy Pathways USA, an initiative of the Nicholas Institute for Energy, Environment & Sustainability at Duke University, has released a report that offers new insights into US energy transition investments. This report comprehensively models the intersecting effects of the Inflation Reduction Act (IRA), clean electricity development cost increases, and the impacts of proposed US Environmental Protection Agency (EPA) greenhouse gas (GHG) regulations for fossil fuels.
Core findings of the modeling include:
- The IRA substantially accelerates the decline in US emissions through 2032, even in the face of recent renewables cost increases. After 2032, future reductions require additional policies.
- Recent increases in financing and equipment costs have disproportionately large effects on renewables and have dampened the speed of the renewables transition but not altered basic trends.
- Regardless of inflation, retail electricity prices and household electricity bills decrease under the IRA.
- The availability of both sites and permitting for renewables can have a major effect on emissions trends. Reductions in the scope of renewables sites can potentially lead to emissions that are 50% higher in 2032 than otherwise expected under the IRA.
- The IRA can dramatically change the desired investments in renewables in some regions of the country, while other regions might adopt similar strategies irrespective of the IRA.
- If natural gas prices remain low, gas generation will largely displace nuclear once the IRA production credits expire, while also displacing many potential new renewables.
- The electrification of transportation can increase emissions from generation, but total generation emissions would remain at levels well below those today; even before considering emissions savings from the vehicles themselves.
- Some regions will require a significant number of miles of new spur transmission lines to connect new renewables to the grid. However, interregional expansion of long-distance transmission may be limited based on current costs.
- The EPA GHG proposal can potentially cut in half the emissions remaining after the conclusion of the IRA. However, the proposal does not reach net-zero emissions from generation by 2050.
- Under the EPA GHG proposal, the relative prices of natural gas and hydrogen, or costs associated with retrofitting gas units to co-fire with hydrogen, can have large effects on both emissions and costs.
- Prior to 2038, the majority of emissions reductions from the GHG proposal are the result of coal carbon capture and storage. After 2038, hydrogen markets contribute most of the additional reductions, along with increased renewable generation (assuming hydrogen is cost competitive with natural gas).
- If the clean hydrogen needed under the EPA GHG proposal is provided by electrolysis, significant amounts of new generation may be required. Solar photovoltaics expand to meet electrolysis needs, but they may not provide all requisite electricity.
Energy Pathways USA is convened by the Nicholas Institute for Energy, Environment & Sustainability based at Duke University, in collaboration with the Energy Transitions Commission. This report constitutes a collective view of Energy Pathways USA. Members of Energy Pathways USA endorse the general thrust of the arguments made in this report but should not be taken as agreeing with every finding or recommendation. The companies involved have not been asked to formally endorse the report.
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Ross, Martin, John Ewing, Brian Murray, Timothy Profeta and Robert Stout (2023). Projecting Electricity-Sector Investments Under the Inflation Reduction Act: New Cost Assumptions and Interactions with EPA’s Greenhouse Gas Proposal. Retrieved from https://hdl.handle.net/10161/31688.
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Scholars@Duke

Martin Ross
Martin Ross is a senior research economist at Duke University's Nicholas Institute for Environmental Policy Solutions, specializing in environmental and energy economics and macroeconomic-simulation modeling.
Prior to joining the Nicholas Institute at the end of 2011, he worked with RTI International where he developed the Applied Dynamic Analysis of the Global Economy (ADAGE) model, which is used by the U.S. Environmental Protection Agency (EPA) to respond to Congressional requests for legislative analyses. The ADAGE model can investigate many types of economic, energy, environmental, and trade policies at the international, national, and U.S. regional levels. It is particularly useful for examining how climate-change mitigation policies limiting carbon dioxide (CO2) emissions from energy consumption and non-CO2 greenhouse gas (GHG) emissions will affect all sectors of the economy, altering industrial and residential energy consumption and efficiency. Research conducted for the U.S. EPA Climate Change Division, the Stanford Energy Modeling Forum, and the Pew Center on Global Climate Change has involved using the ADAGE model to estimate U.S. macroeconomic impacts of legislative proposals to reduce GHG emissions. Other modeling by Ross has included developing a detailed technology model of electricity markets to examine how criteria pollutant and GHG policies affect capacity planning decisions and generation costs.
Prior to joining RTI, Ross spent several years at Charles River Associates where he developed regional models to look at effects of climate-change mitigation policies and macroeconomic impacts of electric-utility legislation. In addition to his legislative analysis, Ross has advised industry groups such as the Electric Power Research Institute and Edison Electric Institute on economic and electricity modeling, and is published in The Energy Journal, Energy Economics, and Climactic Change, among others.
Ross holds both a doctoral and master's degree in economics from the University of Colorado, Boulder, and a bachelor's degree in economics from Michigan State University.

John Jackson Ewing
Jackson Ewing is director of energy and climate policy at the Nicholas Institute of Energy, Environment & Sustainability at Duke University. He is also an adjunct associate professor at the Nicholas School of the Environment and a faculty affiliate with the Duke Center for International Development at the Sanford School of Public Policy. He works closely with the Duke Kunshan University Environmental Research Center and International Masters of Environmental Policy programs to build policy research collaboration across Duke platforms in the United States and China.
Prior to joining Duke, Ewing was director of Asian Sustainability at the Asia Society Policy Institute in New York, where he led projects on Asian carbon market cooperation and sustainable resource development in the ASEAN Economic Community. He previously served as a MacArthur Fellow and head of the Environment, Climate Change and Food Security Program at Singapore’s S. Rajaratnam School of International Studies, and has worked throughout Asia with actors in government, the private sector, civil society, and international organizations.
Ewing publishes widely through a range of mediums and is a regular contributor to radio, television and print media. He holds a doctorate in environmental security and master's degree in international relations from Australia’s Bond University, and a bachelor’s degree in political science from the College of Charleston.
Brian Murray
Dr. Brian C. Murray is Director of the Nicholas Institute for Energy, Environment & Sustainability, Research Professor at the Nicholas School of the Environment (primary) and Sanford School of Public Policy (secondary), and Faculty Associate of the Duke Initiative for Science & Society. In 2015 he was Fulbright Visiting Research Chair in Environment and Economy at University of Ottawa’s Institute of the Environment. He is widely recognized for his work on the economics of energy and climate change policy, including the design of market based mechanisms to reduce greenhouse gases and deploy low-carbon energy. Members of the United States Congress, state legislators and regulators have sought the counsel of Dr. Murray and colleagues in developing energy and climate legislative proposals and regulatory options. Their development of the cost containment reserve mechanism is now in use in several greenhouse cap-and-trade programs in North America. Dr. Murray has been invited as a co-author of several national and international assessments of natural resources, especially related to energy and climate change. Of particular note, he serves on a National Academy of Sciences panel on greenhouse gases and the tax code, where he led the panel’s efforts on biofuel subsidies. He was a convening lead author of the Intergovernmental Panel on Climate Change’s Special Report on Land Use, Land Use Change, and Forestry. He has convened several forums of economic modeling experts to examine and communicate the results of their climate, energy and land use policy efforts to the public and private sectors. His research has examined the economic effects of traditional command-based regulatory strategies for pollution control and more market-oriented approaches such as cap-and-trade programs and emission taxes. He has been a consultant to a wide range of clientele in the public and private sector, including numerous federal government agencies, members of Congress and their staff, state regulatory agencies, CEOs and senior staff from Fortune 500 companies, trade groups, nongovernmental organizations, and other academic institutions. He has authored or co-authored over 100 publications in books, edited volumes, and professional journals across a range od disciplines. From 2017-21 he was a regular contributor to Forbes. Prior to coming to the Nicholas Institute in 2006, Dr. Murray was Director of the Center for Regulatory Economics and Policy Research at RTI International, a university-affiliated not-for-profit research institution.

Timothy H Profeta
Tim Profeta is a senior fellow at Duke University’s Nicholas Institute for Energy, Environment & Sustainability and associate professor of the practice at Duke’s Sanford School of Public Policy.
In 2023, Profeta returned to Duke from two years of service at the U.S. Environmental Protection Agency, where he served as the special counsel for the power sector and a senior advisor. At the Agency, Profeta had a lead role in the development of the regulatory strategy affecting the power sector, including the recent proposed greenhouse gas regulations, served as a liaison between the Agency and other federal departments and agencies regarding power sector policies, and took an instrumental role in the design of several Agency programs that were authorized in the 2022 Inflation Reduction Act.
Prior to leaving for EPA, Profeta was the founding director of the Nicholas Institute for Environmental Policy Solutions, which merged with the Duke University Energy Initiative in 2021 to create the Nicholas Institute for Energy, Environment & Sustainability. Since its creation in 2005, the Nicholas Institute has grown into a major nonpartisan player in key environmental debates, serving both the public and private sectors with sound understanding of complex environmental issues.
Profeta’s areas of expertise include climate change and energy policy, the Clean Air Act, and adaptive use of current environmental laws to address evolving environmental challenges. His work at the Nicholas Institute has included numerous legislative and executive branch proposals to mitigate climate change, including providing Congressional testimony several times on his work at Duke University, developing multiple legislative proposals for cost containment and economic efficiency in greenhouse gas mitigation programs, and facilitating climate and energy policy design processes for several U.S. states.
Prior to his arrival at Duke, Profeta served as counsel for the environment to Sen. Joseph Lieberman. As Lieberman’s counsel, he was a principal architect of the Lieberman-McCain Climate Stewardship Act of 2003. He also represented Lieberman in legislative negotiations pertaining to environmental and energy issues, as well as coordinating the senator’s energy and environmental portfolio during his runs for national office. Profeta has continued to build on his Washington experience to engage in the most pertinent debates surrounding climate change and energy.
Profeta is a member of the Climate Action Reserve Board of Directors, and is a member of The American Law Institute.
Profeta earned a J.D., magna cum laude, and a master's in environmental management in resource ecology from Duke in 1997 and a Bachelor's degree in political science from Yale University in 1992.
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