Decarbonizing the U.S. economy to achieve a 50–52% reduction in greenhouse gas emissions by 2030 and net-zero emissions by midcentury will require the accelerated deployment of existing low-carbon technologies as well as new technologies that are not yet commercially available. Furthermore, even as low-carbon technologies continue to become more cost-competitive, their pace of deployment needs to increase rapidly. Federal policies and investments are needed to drive technology deployment and market transformation, change consumer behavior, and encourage investment in infrastructure and key technologies needed for a net-zero economy. This working paper identifies near-term policies and federal investments that can catalyze emissions reductions this decade and set up the economy for deeper emissions reductions in later decades. The analysis compares the progress toward a net-zero goal offered by different policy packages that overlap and build on one another, which are modeled under three mitigation scenarios. The paper focuses on the role played by tax incentives, infrastructure investments, targeted spending, and sector-specific performance standards as building blocks for a successful decarbonization strategy.

Key Findings

1. Tax credits for existing and new low-carbon technologies, in combination with federal investment in climate-smart infrastructure, significantly improve the adoption of new technologies but are not enough by themselves to enable the country to reach its 2050 goal.

2. Performance standards, such as a clean electricity standard, zero-emissions vehicle standard, low-carbon fuel standard, and appliance energy efficiency standards, are necessary to attain economy-wide net-zero emissions by 2050, especially in the absence of economy-wide carbon pricing.

3. Remaining emissions in hard-to-mitigate sectors will need to be offset by enhanced natural and working land sinks and negative emissions technologies.

4. Decarbonizing the U.S. economy is economically feasible. With reference oil prices, net costs are $40 billion (0.2 percent of U.S. gross domestic product [GDP]) higher in 2030 than in the Reference Scenario (RS). By 2050, net costs are $113 billion less than in the reference case, meaning there is a net savings of 0.3 percent of U.S. GDP. Net costs vary with fuel price assumptions but are affordable in all cases.