Biden’s Green New Deal Will Make Little Difference

By Paul Homewood



I covered the story of the US Green New Deal, laughingly titled the Inflation Reduction Act, a couple of weeks ago.

My conclusion was that the amounts of money budgeted are so tiny as to make little difference to US emissions.

We are now getting more detail, which confirms my initial view:





Just to recap. it has been widely claimed that the Act will reduce US emissions by 40% from 2005 levels by 2030 – effectively a 30% cut from today. President Joe Biden called it the “largest investment ever in combatting the existential crisis of climate change”.

But the details released by the Committee for a Responsible Federal Budget show these claims are nonsense:






First bear in mind that this spending is spread over ten years, and can of course be reversed by a future Congress. Secondly, remember that much of this money will be wasted on administration, pork barrelling or simply be siphoned off in kick backs. Some money will also go to things like air pollution and conservation, which may not have any direct impact on emissions.

Let’s focus on the three main sectors: Electricity, EVs and “Individual Incentives”.



Clean Electricity

$161bn is allocated for clean electricity tax credits, which equates to about 0.07% of GDP. In UK terms, this is about £1.4 bn a year.

Here though we are currently subsidising renewable energy to the tune of £11bn a year, but it still only supplies a third of our power. In the US, the figure is 12%.

The Act provides for various tax credits, but let’s focus on the Clean Electricity Production Tax Credit, which is effectively a subsidy of 1.5 cents/kwh. If the whole of the $161bn is spent on these credits, it would be enough to fund renewable generation of 1073 TWh a year. After taking into account the likely rise in demand for electricity, say 10%, such an increase in renewables could reduce emissions from the power sector by about 25%.

As emissions from power account for a quarter of total GHGs, that would equate to about 6% of the total.



Electric Cars

$37 billion has been allocated for EV tax credits, based around $7500 per car, enough to fund about 500,000 cars a year.

There are currently about 250 million cars on the road in the US, and annual sales of about 17 million. Biden, I understand, has claimed that his proposals will see EV sales rising to a half of all sales by 2030!

But clearly the money set aside will barely scratch the surface.

There is, by the way, a twist to this story. According to the Act, the car will need to satisfy two manufacturing requirements to be eligible for the credit. The first requires a portion of the battery parts to be made in North America. The second provision requires a percentage of the minerals that go into that battery to be mined domestically or in countries with a free-trade agreement with the U.S.

Clearly this provision will severely limit the roll out of subsidies; and given that such cars will be much dearer than EVs with Chinese batteries, the subsidy will be worthless anyway.



Heat Pumps etc

Individual Clean Energy Incentives offer subsidies worth $37 billion for homeowners who install heat pumps, solar panels, insulation and other low carbon technology.

This is similar to various schemes operated in the UK, which have had very little take up because the subsidy only covers a fraction of the cost of such installations.

Homeowners installing heat pumps, for instance, will qualify for a maximum of $2000 in tax credits, while solar panels attract a subsidy of 30% of the cost.

If we assume an average of $3000 per house, that would fund 1.2m homes each year. So after ten years, we might see 12 million homes with new solar panels, a heat pump or something similar.

There are 128 million households in the US, so that means less than a tenth. Given that those households will still be consuming lots of energy, regardless of a heat pump or solar panel, the reduction in domestic emissions will be negligible – indeed, rising energy consumption will almost certainly offset any savings achieved.

By the way, about 2 million homes currently have solar panels in the US, and the new package merely extends existing subsidies, with a few tweaks. It is hard to see this figure rising drastically under Biden’s new plan, as most people cannot afford them, even with a subsidy, and often their houses are not suitable.


The three sectors above account for $234 bn, two thirds of the total budget. The rest will have very little impact on emissions.

My figures above suggest that current GHGs might be cut by 7 or 8%, a far cry from the 30% advertised. They equate to a cut of 18% since 2005.

Climate Action Tracker

The Climate Action Tracker, has now published its own analysis of the Green New Deal. This also shows that the current actions and policies, including the new Act, will only see a slow continuation of the emissions reductions we have seen in the last decade, much of which are down to the switch from coal to natural gas. According to them:

According to our analysis, the US will need to implement additional policies to reach its proposed targets. We project GHG emissions will reach 4.7 to 5.6 GtCO2e in 2030

This band is remarkably wide. At its top limit of 5.6 GtCO2e, it represents a cut of about 21% from 2005, a similar outcome to my guesstimate of 18%. They have not published their data yet, but it would appear that their pessimistic estimate is actually the most realistic one.

It is obviously in Joe Biden’s and the Democrats’ interest to exaggerate the impact of this Act, but the reality is that it will make little difference .


August 23, 2022 at 10:03AM

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