Keeping US carbon cuts on track will hinge on the upcoming election

The U.S. still has a chance to cut greenhouse gas emissions fast enough to meet its 2030 climate commitments. But that chance rests on keeping key clean energy incentives and climate regulations in place — something that will itself depend on which party wins control of the federal government in November.

So finds the latest U.S. emissions report from analysis firm Rhodium Group released on Tuesday. By 2030, federal incentives and regulations now in place could drive the country to a 32 to 43 percent reduction in GHG emissions below 2005 levels, per the report. That’s still not enough for the U.S. to meet its Paris Agreement commitment of a 50 to 52 percent reduction by 2030, but it’s a marked improvement from Rhodium’s 2022 forecast of a 24 to 35 percent cut by 2030. 

That improvement from 2022 to 2024 is due to the groundbreaking clean energy incentives created by the Inflation Reduction Act, which congressional Democrats passed against Republican opposition in 2022, as well as federal emissions regulations imposed by the Biden administration that Republicans are expected to try to undo if they win power.

Without those policies in place, the emissions outlook would likely be far worse.

“This year and last year there have been two contrasting forces on a macro level,” Ben King, associate director at Rhodium and lead author of the report, told Canary Media. On one side, ​“we’ve seen higher economic expectations on macro growth,” he said — referring to the boom in electricity demand from data centers, factories, and other fast-growing industries — ​“and cheaper fossil fuel prices. All things being equal, those would lead to higher emissions.”

Counterbalancing those drivers of emissions increases, he said, are the regulations finalized by the U.S. Environmental Protection Agency that limit methane flaring and leaking from oil and gas operations, set emissions standards for light-duty and heavy-duty vehicles, and require long-term emissions reductions from fossil-fueled power plants.

These EPA rules are already being challenged by industry groups and by Republican state attorneys general. The U.S. Supreme Court’s decision in June overturning the 40-year-old legal precedent known as the ​“Chevron doctrine” has increased the likelihood that these legal challenges will find success with conservative federal judges.

Whether a future EPA chooses to fight any adverse court decisions or acquiesce to them will influence the eventual outcome of these legal challenges, Rhodium’s report points out. ​“It’s going to matter a whole heck of a lot whether that’s a Democratic or Republican administrator” leading the EPA if and when those decisions are made, King said.

Meanwhile, the Inflation Reduction Act and 2021’s Infrastructure Investment and Jobs Act, which the report describes as ​“the most substantial action the federal government has ever taken on climate change,” have been critical in driving investment in clean energy technologies across sectors. Rhodium tracked $71 billion in investment in clean energy and climate technology in the first quarter of 2024, a 40 percent increase from one year prior and a continuation of sustained quarter-on-quarter growth that began in early 2021. 

But at least some of these incentives could face the risk of being clawed back or undone if Republicans win control of the White House and Senate and retain control of the House of Representatives, the report notes. Project 2025, a policy platform organized by conservative think tank the Heritage Foundation that’s expected to serve as a template for a future Donald Trump administration, calls for eliminating clean energy incentives and expanding the extraction and export of coal, oil, and fossil gas.

Uncertainties beyond politics: Data center growth and clean energy roadblocks

That’s not to say that Democratic control of the White House or Congress is enough to put the country on track to meeting its Paris Agreement goals. ​“The US will still have a long way to go, with a lot of policy action required, to advance to even deeper levels of decarbonization,” Rhodium’s report notes. Federal policy is a primary, but not controlling, factor in determining success or failure on that front.

Rhodium modeled a range of emissions cases, taking into account factors including the cost of clean energy versus fossil fuels, the pace at which clean energy technologies can be deployed, and the underlying speed of economic growth, which determines demand for energy of all varieties.

The power sector remains ​“the nexus for decarbonization in this report,” King said. Electricity generation is the second-largest source of U.S. greenhouse gas emissions, and the rate of clean energy adoption in the electricity sector will determine how quickly efforts to electrify transportation, industry, and building heating will clean up those sectors as well.

The prospects of rapid power-sector emissions declines depend greatly on factors that lie beyond the federal government’s direct control, however.

One big X factor is the pace of growth in demand for electricity. Rhodium Group’s model already factored in expected power demand from electric vehicles and building heating, King said. ​“That’s predictable long-term load growth, which utility and grid planners have time to prepare for.”

But since its 2022 analysis, Rhodium’s model has had to incorporate ​“unanticipated surges” in additional demand from the massive number of data centers being proposed to provide computing power for artificial intelligence (AI) services, as well as from the tens of billions of dollars of new solar, battery, and EV factories spurred by the Inflation Reduction Act.

Another uncertainty lies in the ​“headwinds” that are holding back the rapid deployment of solar and wind power supplies to meet growing electricity demand. The U.S. deployed a record 19 GW of utility-scale solar and 6.6 GW of utility-scale storage last year, helping to drive down power-sector emissions. But that growth rate, especially given the lackluster addition of just 6.4 GW of wind power, doesn’t bring the U.S. within reach of its Paris Agreement commitment.

Even maintaining this slower-than-necessary pace of growth ​“may be a struggle as developers face challenges” including long interconnection queues and insufficient capacity on the country’s transmission grids, as well as increasing local opposition to siting and permitting clean energy projects, the report notes. If rising demand isn’t met with clean electricity, it’s more likely that U.S. utilities will keep coal plants open longer and build new fossil-gas-fired power plants to make up the difference.

The following chart indicates just how significantly the trends in data-center demand and supply-side headwinds could alter Rhodium’s midrange power-sector emissions-reduction forecasts. 

These variables have led Rhodium to cast ​“wide uncertainty bars around a lot of these outcomes” for U.S. power-sector emissions reductions, King said. Still, despite the uncertainty of the status quo, what’s clear is that the odds of the country hitting any of its decarbonization goals are far higher if key climate regulations remain intact.