The Inflation Reduction Act will drive electrification of transportation forward but won’t be enough to meet the United States’ climate goals under the Paris Agreement, according to a new report from the International Council on Clean Transportation.
The ICCT is best known as the research group that broke the Volkswagen Dieselgate scandal. We recently covered another of its reports showing that plug-in hybrids use more gas than previously thought.
Its new report analyzes the effects that the US Inflation Reduction Act and its new electric car tax credits will have on EV adoption in the US.
The analysis comes to the conclusion that the new tax credits will be a significant driver of electrification, likely resulting in 48-61% EV sales among light duty vehicles in 2030. This would exceed the Biden administration’s goal of 50% EV market share by 2030.
However, the ICCT says that EVs must meet 67% market penetration, alongside significant increases in ICE efficiency, in order for the US to meet its Nationally Determined Contribution to world climate goals.
As a result, more action is needed to ensure that the US is still within reach of world climate goals. The ICCT says that this action should come from the EPA, which will release a new proposal for greenhouse gas standards in March.
The ICCT suggests that the EPA align these new standards with California’s recently finalized Advanced Clean Cars II standard. This standard is already expected to be adopted by several “CARB states” that automatically follow California’s regulations. But if more states join California or if EPA aligns their standards with California’s as they did in 2012, EV adoption can come in on the high end of ICCT’s projected range, therefore enabling quicker decarbonization of transport.
The report’s analysis did not take into account any federal standards for 2027 onward, as those are currently not in place. So any EPA standards implemented above and beyond the status quo should help to increase electrification further, as long as the EPA targets electrification rates higher than 50% by 2030.
Further, the ICCT argues that strong EPA standards can help serve as a backstop against legislative uncertainty. With efforts still underway to modify the Inflation Reduction Act, we cannot rely on one law, particularly with the specter of a potentially hostile Congress. It is therefore better to have a two-pronged approach, both in legislation and federal rule making, to make climate regulation more robust.
In addition, EV market share will likely drop in 2032 as EV tax credits phase out, and strong EPA regulations can help ensure that electrification momentum is maintained past that point.
But the report also warns that more action will need to be taken by industry as well, as lead times for vehicle manufacturing and charging infrastructure deployment, particularly for heavy duty vehicles, can be long. So, government and industry both need to work immediately on investing in manufacturing and deployment of infrastructure to prepare for potential rapid electrification of the vehicle fleet. Legislative and regulatory certainty, through strong implementation of the Inflation Reduction Act and EPA guidelines, can help these companies and local governments get started on planning the long-term investments needed to make electrification happen.
According to the Climate Action Tracker, the US’s NDC is only “almost sufficient” to keep warming under 2ºC, whereas Paris and the UN are hoping to limit warming to 1.5ºC, not 2ºC. And US policy is currently not even strong enough to meet US goals, much less world climate goals.
And these goals are non-negotiable. Perhaps we can negotiate with other governments and with citizens about what we want to do, but what we want doesn’t matter. The only thing that matters here is physics, and physics says that we must decarbonize to keep warming in check or else things are going to go very badly, very quickly.
So, meeting the 1.5ºC climate goal isn’t just a nice idea, it is mandatory. And if the IRA is not enough to meet that goal, then we need to do even more.
As we said when it was passed, it is refreshing to finally see big action, given that it is the largest climate law ever passed by any country. But it’s still far below what’s needed, as this analysis confirms. We still need more action at every level, and if the party that controls the House continues to deny the reality of climate change, then the EPA needs to step in and provide that action (and companies, local governments, consumers, citizens, media… everyone).