Answering Frequently Asked Questions about the Inflation Reduction Act’s Energy Subsidies - Highlighted Article

From: Cato Institute

By: Travis Fisher and Joshua Loucks

Date: March 17, 2025

Answering Frequently Asked Questions about the Inflation Reduction Act’s Energy Subsidies

Last week, Cato published Policy Analysis No. 992, titled “The Budgetary Cost of the Inflation Reduction Act’s Energy Subsidies: IRA Energy Tax Credits Could Cost $4.7 Trillion by 2050.” This work is significant because the IRA is the largest climate subsidy package in US history (possibly in world history), yet no one has a clear picture of just how much the IRA’s energy provisions will cost American taxpayers.

Our analysis is also timely because members of Congress are debating which parts of the IRA to reform or repeal. We find that energy spending under the IRA is much higher than government estimates would indicate, up to $4.7 trillion, and faces no binding cap. The energy subsidies in the IRA could continue to climb each year through 2050.

We hope Congress will fully repeal the IRA’s energy subsidies as part of the coming budget reconciliation package. At a minimum, the IRA’s significant spending deserves scrutiny. Along those lines, we appreciate the feedback we have received on our estimates of the cost of the IRA’s energy subsidies. Here are our responses to some of the most common questions and critiques of our policy analysis. (continue reading)

Answering Frequently Asked Questions about the Inflation Reduction Act’s Energy Subsidies