Inflation Reduction Act's Energy Subsidies Exposed as a $4.7 Trillion Entitlement Program

The Inflation Reduction Act (IRA) was touted as a climate solution, but it has turned the tax code into a multi-trillion-dollar energy entitlement program, creating subsidies without caps, sunsets, or accountability. The House Ways and Means Committee recently passed a tax bill that repeals eight of the IRA credits, phases out five, and keeps or expands several others. However, this approach is not aggressive enough, and experts argue that full repeal is the only responsible path forward. The Energy Freedom Act, introduced by Senator Mike Lee, offers a more principled approach by repealing over 20 green IRA energy tax subsidies by the end of the year.

Key Takeaways:

The IRA's energy tax subsidies are estimated to cost up to $4.7 trillion over the next 25 years, with a 10-year cost projection of $270 billion, which has dramatically increased to $852 billion.
The subsidies are so lucrative that many firms are designing projects around the tax code instead of environmental outcomes, leading to delays, cancellations, and high costs, with estimates suggesting a cost of between $2 million and $7 million per job created.
Biden-era subsidized manufacturing projects have already seen 40% of them delayed or canceled, with an estimated CO abatement cost of between $224 and $535 per ton, which is multiple times higher than what would have passed a cost-benefit test under the Biden and Obama administrations' estimates of the social cost of carbon.
The House tax bill only repeals about 60% of the ten-year cost of the IRA credits, leaving the door open for their potential return.
Full, retroactive repeal of the IRA is the only way to end the cycle of failed green industrial policy that builds uncompetitive industries on the shaky foundation of federal tax credits.

Key Players:

Senator Mike Lee (R-Utah) introduced the Energy Freedom Act, which aims to repeal over 20 green IRA energy tax subsidies by the end of the year.
Representatives Josh Brecheen (R-OK) and Chip Roy (R-TX) co-sponsored the Energy Freedom Act.
Shuting Pomerleau estimates that the House tax bill only repeals about 60% of the ten-year cost of the IRA credits.

Statistics:

Estimated cost of IRA energy tax subsidies: up to $4.7 trillion over 25 years.
Current 10-year cost projection: $852 billion, up from the original $270 billion.
Cost of IRA credits per job created: $2 million to $7 million.
Number of delayed or canceled Biden-era subsidized manufacturing projects: 40%.
Estimated CO abatement cost: $224 to $535 per ton.
Number of IRA subsidies repealed by the House tax bill: 8.
Number of IRA subsidies phased out by the House tax bill: 5.
Number of IRA subsidies kept or expanded by the House tax bill: several.

Sources:

(https://www.cato.org/people/adam-n-michel) Adam N. Michel
(https://www.cato.org/people/joshua-loucks) Joshua Loucks
(https://www.cato.org/policy-analysis/budgetary-cost-inflation-reduction-acts-energy-subsidies) Inflation Reduction Act (IRA) policy analysis
(https://www.energy.senate.gov/2025/5/chairman-lee-introduces-bill-to-end-biden-s-trillion-dollar-green-new-deal-subsidies) Energy Freedom Act
(https://www.americanactionforum.org/insight/evaluating-the-iras-clean-energy-tax-provisions/) Evaluating the IRA's clean energy tax provisions
(https://www.cbo.gov/publication/58366) Congressional Budget Office (CBO) report
(https://www.cato.org/blog/answering-frequently-asked-questions-about-inflation-reduction-acts-energy-subsidies) Answering frequently asked questions about IRA energy subsidies