Inflation Reduction Act’s Real Climate Impact Is a Decade Away

Law could speed emerging technologies such as green hydrogen along the learning curve, accelerating adoption 

By Greg Ip of The WSJ. Excerpts:

"the U.S. was already on track to reduce emissions. The incremental reduction in emissions from the IRA is 6% to 10%, according to the research firm Rhodium Group, or 15%, according to Princeton University’s Zero Lab. This translates to roughly 1% to 3% of expected global emissions in 2030: a start, but not enough to move the needle on temperature."

"Similar, though less dramatic, dynamics have been at work in wind power and battery storage. They all hewed to “Wright’s Law,” named for the 1930s aeronautical engineer Theodore Wright, according to which each doubling of production is accompanied by a roughly constant percentage decline in cost, known as the learning rate. “Over the long term these learning rates appear to be the best way to predict the future cost of technology that we know of,” said Ramez Naam, an author and investor in early-stage green energy companies.

One implication is that as a technology matures, production takes longer to double and so costs fall more slowly. In solar power, for instance, PV module factories are now so large and the manufacturing process so efficient that incremental improvements are much harder to come by. Sure enough, the cost of solar-generated power has fallen an average of 6% annually from 2018 through 2021, compared with 21% in the previous nine years, according to Lazard, an investment bank. Costs are also falling more slowly in wind power."