Structural updates to allow for Inflation Reduction Act in BAU

[mkmahajan]

This week, I have made a number of updates needed to incorporate the IRA into our BAU. Many of these were data only updates, but a few places required structural updates. Here's a list of the structural changes I have made so far:

• Completed Github issues #208 and #246 to link EV charger deployment with EV shadow costs and to subscript vehicle subsidies by vehicle technology (see notes in those issues)
• Added a BAU distributed solar subsidy and subscripted the existing distributed solar policy lever by building type (the IRA includes tax credits for residential solar)
• Added a BAU CCS subsidy so we can capture the 45Q tax credits. We still don't have a policy lever to set any additional CCS subsidy, but including any BAU subsidies will be important to capture the government revenue implications in a scenario like our NDC scenario where we have a lot of CCS coming online that would receive $85/ton.
• I created a new time series new variable for the percentage change in domestic content share by ISIC code, mirroring the format for the percentage change in output. That way we can represent the expected increase in domestic production due to the IRA's clean manufacturing credits in our BAU. This feature may also be useful in the future to represent expected shifts in production.

There are a few remaining pieces Robbie and I chatted about adding to represent the IRA:

• Adding hydrogen production pathways for electrolysis that specifically uses green hydrogen and for steam methane reforming with CCS. It would be interesting to add the green electrolysis pathway and require that incremental electricity demand due to new hydrogen production be clean by perhaps slotting it into the RPS requirements - the topic of additionality is coming up a lot in the hydrogen PTC conversation right now. The idea of including CCS for hydrogen is already noted in issue #195.
• I still need to do data work to adjust industrial energy consumption based on the IRA, but will hold off until we potentially address issue #266.
• Allow for battery pack subsidies. Robbie was separately working on this as part of another side branch along with some other transport pieces, and I will coordinate with him on this.

[mkmahajan]

One issue I would like to follow up on with Jeff next week:

• While working on the vehicle subsidy, I noticed that the variable Change in Amount Spent on Vehicles excluding Subsidy Payments, which subtracts vehicle subsidies from the capital costs, is only used in the Cost Outputs sheet. But other categories of capital expenditures tracked in that sheet like Change in Electricity Sector Construction Costs report total expenditures before subsidies. It seems like we should be using a version of vehicle costs that does not subtract out subsidies, but I wanted to confirm.

[mkmahajan]

The three remaining pieces noted above have now been finalized. For the hydrogen edits, I expanded the hydrogen production pathways subscript to include green hydrogen (the incremental electricity demand for new hydrogen electrolyzers is guaranteed to come from clean sources, i.e. that amount is added to the RPS requirement) and blue hydrogen, which is linked to the CCS module.