Analysis of API's Climate Framework and CO2 Pricing

This technical report presents an analysis of the American Petroleum Institute's (API) climate framework, focusing on the results of the API22-NEMS model in relation to the CO2 price scenario influenced by the Inflation Reduction Act (IRA). The report outlines the modeling methodology and key findings regarding emissions and economic impacts. The API framework incorporates an economy-wide CO2 price starting at $35-50 per metric tonne, with revenue recycling aimed at technology research and development. The analysis compares various scenarios, including pre-IRA and post-IRA cases, highlighting significant reductions in CO2 emissions, particularly in the power sector. The findings indicate that the CO2 pricing policy is more effective in reducing emissions through 2050 compared to the IRA provisions alone. Additionally, the report discusses shifts in energy production and household expenditures resulting from the IRA and CO2 pricing, emphasizing the transition towards cleaner energy sources and the implications for future emissions targets.