Fossil fuel dependence leaves the United States and its economy vulnerable in many ways. The volatility of fossil fuels and the stranglehold that oil and gas CEOs have on supply decisions means pain for consumers at the gas pump and in their utility bills. In 2021, climate disasters cost the United States $145 billion—and that price tag is only expected to rise in the coming years. Global energy supplies are subject to the dangerous whims of foreign dictators. Breaking free from fossil fuel dependence will require the big, bold investments in the clean energy economy that are a major priority in President Joe Biden’s economic agenda. The clean energy transition that is promised by a combination of these climate and environmental justice investments paired with ambitious administrative standards and state climate action will not just drastically reduce planet-warming emissions (up to 73 percent below 2005 levels by 2031 in the power sector alone). It will also lower costs for American families across the board—making for a cleaner, more reliable and more affordable future.
The clean energy transition that is promised by a combination of these climate and environmental justice investments paired with ambitious administrative standards and state climate action will not just drastically reduce planet-warming emissions (up to 73 percent below 2005 levels by 2031 in the power sector alone).
In fact, when coupled with executive and state action, the investments in President Biden’s economic plan would start cutting household energy costs immediately—potentially delivering savings as soon as late this year if Congress acts fast. These clean energy investments deliver more and more savings every year, building to an average household energy cost savings of $500 annually by 2030. That means a 12 percent to 13 percent savings for households on average in less than a decade, compared to today’s energy costs.
Breaking down the clean energy cost savings from Biden’s economic plan
The clean energy tax credits in President Biden’s economic plan that incentivize clean electricity, electric vehicles, advanced manufacturing, and more will spur rapid clean energy deployment, making clean electricity and clean vehicles more ubiquitous and more affordable in the near term. Here’s where those 12 percent to 13 percent in energy cost savings come from, based on review of supplemental results from the Rhodium Group’s Pathways to Paris report:
- The average household electricity bill—even counting all those households that are now using electricity, not fossil fuels, to heat their homes and drive their cars—will drop by up to 4 percent by 2030.
- The average home heating bill—whether a home uses natural gas, propane, or home heating oil—will drop by up to 8 percent by 2030, reflecting lower fuel costs overall, as well as savings for the households that switch to electricity.
- And, the average household spending on gasoline will drop between 19 percent and 24 percent as a result of more efficient vehicles and people switching to electric cars.
These savings will be felt in every region of the country, ranging from a 9 percent total energy cost savings in New England, to 12 percent in the Midwest, and up to 24 percent on the West Coast.
How these cost savings will be realized
The clean energy investments in President Biden’s economic plan will incentivize the rapid deployment of significantly more clean energy capacity that will help consumers see cost savings—and these savings will be even more significant when paired with ambitious action by the executive branch to set standards on pollution from power plants, vehicles, and more. These investments will support households making the overall switch from fossil fuels to electricity—whether in their homes or vehicles. In terms of price and energy efficiency, driving an electric car costs less than half as much per mile as driving a gasoline-powered car. And even before the present spike in natural gas prices, there were more than 100 million households nationwide that would save hundreds of dollars every month after switching from a fossil fuel furnace or from an outdated resistance heater to an electric heat pump.
Even the households that do not switch to electricity are going to see major savings from the economywide transition to clean energy. For example, if your neighbor buys an electric vehicle, that is one less person pulling up to the gas station ahead of you—reducing the overall demand for gasoline and, thus, likely relaxing prices. Likewise, with more homes transitioning to electricity, demand for natural gas goes down, and the price of natural gas for heating a house will drop.
The clean energy tax credits are efficient policy
The clean energy tax credits package in President Biden’s economic plan will more than pay for itself, according to a recent analysis by the Rhodium Group and the University of Chicago’s Energy Policy Institute. The analysis found that the societywide benefits of the clean energy tax credits are three to four times greater than their costs, making it one of the cheapest climate policy tools currently in Congress’ toolbox. Specifically, the researchers found that these provisions reduce carbon dioxide at a cost of $33 to $50 per ton. This is nearly one-fifth of what the cost of releasing these emissions, instead, would be. Were those avoided emissions to be released, instead, it would mean more deaths from heat waves; lower labor productivity; increased energy costs to cool homes in a warmer world; and the cumulative effects of additional extreme-weather-fueled catastrophes. It also means that, overall, it is cheaper to enact these clean energy tax credits than to not—all while putting our nation on a path to slow these effects of climate change.
Clean energy is reliable and affordable. Congress has the opportunity in front of them, right now, to turbocharge our country’s transition to a clean energy economy, cutting planet-warming emissions, creating millions of jobs, and saving people money in the process. It is time to pass the climate investments in President Biden’s economic plan.
The authors would like to thank the Rhodium Group, Will Beaudouin, and Bill Rapp for their contributions to this column.