Canary Media would like to thank KORE Power for supporting our special report on the first year of the Inflation Reduction Act.
A year ago this week, the first major federal climate law in US history, the Inflation Reduction Act, was signed into law. Then the supporters of the bill explained its meaning with a familiar phrase.
They say the law, which includes hundreds of billions of dollars in clean energy and climate change funding, is a “down payment”: a down payment to force the country to meet its Paris Agreement commitment to cut carbon emissions by 2030. . half. .
But just as the down payment on a house is both a giant step towards home ownership and the start of a series of extended monthly payments, the Inflation Reduction Act is just the first step in a long process a country must go through to achieve its climate goals. .
Since August 16, 2022, the day President Biden signed into law, the United States has announced plans to build more than 100 new clean energy businesses. Renewable energy developers are expected to build projects in the US much faster than previously predicted. Companies from around the world are pouring billions of dollars into U.S. solar, wind, battery and electric vehicle businesses. Companies are developing plans to scale up early technologies such as clean hydrogen.
Government officials also did not sit idly by. At the federal level, the US Environmental Protection Agency has proposed stringent vehicle and power plant emissions regulations to strengthen the law’s ability to reduce emissions. The Department of Energy has provided a record number of clean technology loans. Meanwhile, some states have adopted ambitious clean energy targets and their own subsidies. The Inflation Reduction Act even encouraged foreign governments to follow suit and subsidize their own renewable energy sources.
All of this activity should contribute to the most important goal of the planet – reducing emissions in the United States, the largest emitter of carbon dioxide in history.
A recent article in the journal Science analyzed nine different models and determined that climate laws have put the country on a path to cut emissions by 33% to 40% from 2005 levels by 2030. This is not enough to meet the goal of halving emissions by 2030, but the analysis showed that this is much more than the country could do without the law.
However, the simulation results remain uncertain. If the recent momentum wanes, the US could well fall behind or exceed these emission reduction levels as renewables grow exponentially. It all depends on how well the subsidy provided by the Inflation Reduction Act works.
Financially, the law is practically unlimited; there are no caps on many clean energy and clean technology subsidies. Such an arrangement could mean the law would spend far more federal money on the energy transition than the government’s official estimate of $391 billion — Goldman Sachs predicts the real figure could eventually reach $1.2 trillion.
There is no doubt that massive subsidies will help clean up America’s energy mix at a pace previously dreamed of by climate advocates.
But the actual pace will depend on how quickly governments can distribute money, how quickly businesses can scale up to take advantage of that money, on the willingness and ability of consumers to spend money to electrify their lives, and on how strong the resistance to law enforcement is. authorities. UT meets with representatives of politicians and local communities. All of these factors have come into play over the past year, but there will (or may not) be many more in the coming years that will shape the legacies of the law.
The first measure, speed, has so far been limited to the painstaking process of administering legal subsidies, many of which take the form of tax breaks. Over the past 12 months, the IRS has diligently collected feedback and issued recommendations regarding the requirements that companies and individuals must meet in order to receive IRA funds. But even a year later, some important subsidies – especially for green hydrogen – are still pending.
The process is slow for a good reason: the stakes are very high. Whether the subsidy had the desired effect or whether it was a waste of money may depend on certain words written or omitted from the tax code. In some cases, the intended effect of subsidies is disputed. Such is the case with the electric vehicle tax credit; some interest groups are advocating strict requirements for domestic production of electric vehicles, prioritizing the recovery of US production, while others want to accelerate the adoption of electric vehicles, even if it means reliance on foreign suppliers for the next few years.
But even if the rules for subsidizing clean energy are finalized, not everyone will be able or willing to take advantage of or even realize the opportunities that are opening up. This is especially true when it comes to incentives to encourage consumer adoption of environmentally friendly products such as heat pumps and electric vehicles. As of April, 40 percent of registered voters said they knew nothing about the Inflation Reduction Act, and another 21 percent said they had heard little.
There are tools to help close this information gap, such as the Department of Energy’s Energy Conservation Center, Rewiring America’s online calculator, and even Canary Media’s latest column. But many Americans will still have to learn when considering electrifying the home, not to mention the cost hurdles — and that’s assuming people are generally convinced of the benefits of moving away from fossil fuels.
In addition, the implementation of the climate law faces political and social obstacles. While the red states stand to benefit the most from this law in terms of investment and jobs, Republicans in Congress are keen to weaken the law every time it is passed. Four states have rejected the Inflation Reduction Act funding applications in their entirety, including Florida, where Republican Gov. Ron DeSantis has reportedly turned down more than $350 million in clean energy stimulus from the act.
Some of this resistance may disappear when clean energy jobs are created in Republican communities. In June, Republican Georgia Gov. Brian Kemp defended the state’s burgeoning clean energy industry against criticism from Donald Trump. In West Virginia, a spokesman for the pro-Trump Republican governor’s administration recently called the construction of a new network battery plant the state’s biggest economic announcement “in years.”
But a broader political transition is far from certain, especially in skeptical states where investment in the bill could dwindle and renewables and power plants are likely to continue to face opposition.
A number of other obstacles could prevent the Inflation Reduction Act from realizing its full potential. These include intertwined issues such as permitting reforms and transmission lines—the U.S. is currently not expanding and upgrading its power grid fast enough to support the vast amount of clean energy capacity needed. The problem cannot be overemphasized: much of the law’s power to reduce emissions will come from decarbonizing the grid, but that depends on the US building transmission lines more than twice as fast as it does now—and there is no clear path for the country to get there.
Congressional efforts to speed up the energy infrastructure approval process have stalled for more than a year as Republicans and Senator Joe Manchin (D-WV) try to capitalize on the momentum by making it easier to build fossil infrastructure. other lawmakers are trying to seize the opportunity to ease the construction of fossil fuel infrastructure. There is an internal debate among Democrats about how big of a poison pill they are willing to swallow. FERC has begun taking steps to bring more clean energy onto the grid, but without congressional action, it’s unclear whether the massive scale transmission upgrades that the energy transition requires can be done.
The 2024 presidential and congressional elections create additional uncertainty about the future of the law. If Republicans end up gaining control of the president and Congress, they could eliminate key clean energy incentives in legislation, as they proposed during the spring debt ceiling talks.
Despite all the hurdles the Inflation Reduction Act faces, there is still something to celebrate on its anniversary, which is that the US, responsible for a quarter of all CO2 emissions since the Industrial Revolution, is finally taking some action. It has unprecedented wealth in the fight against the climate crisis. The law’s massive investment in clean energy will help ensure that the trend towards a carbon-free future becomes irresistible with each passing year.
Headquartered in Coeur d’Alene, Idaho with customers on every continent, KORE Power provides functional solutions to meet the growing needs of an expanding green economy and a decarbonized future. As a fully integrated battery and clean energy technology and solution provider, KORE is driving the energy transition through direct access to cutting-edge technologies, clean energy production, and unparalleled support for clean energy jobs and sustainable communities around the world. KORE Power’s robust product portfolio provides commercial, industrial, utility, and defense markets with next-generation batteries, advanced grid+ scalable energy storage systems, intuitive asset management, and support for EV power and charging infrastructure.
Canary Media would like to thank KORE Power for supporting our special report on the first year of the Inflation Reduction Act.
While the Inflation Reduction Act was debated and voted on in Congress, all eyes were on a few key Democratic politicians: West Virginia Senator Joe Manchin, New York Senator Chuck Schumer, and President Joe Biden.
While the enormous role played by these influential political figures in this process is noteworthy, hundreds of other people are working tirelessly behind the scenes to develop and eventually pass the first major climate law ever in the United States. Over the course of several months, climate activists, environmental justice advocates, scientists, lobbyists, political analysts, and Hill’s collaborators helped develop the original “Build Back Better” bill, leading to a landmark agreement that, after Senator Manchin’s departure, bolstered the dream of climate legislation. and advocating that these clauses and provisions be included in the final text, President Biden signed the law into law a year ago this week.
For many, this moment was the culmination of years of research, lobbying, advocacy and organization. To mark the anniversary of the legislation, Canary Media asked seven unsung heroes to reflect on their experiences and share some thoughts on what federal clean energy policy has really become and what remains to be done for the American climate movement.
Canary Media would like to thank KORE Power for supporting our special report on the first year of the Inflation Reduction Act.
At least that’s what it says in the text in French, breaking records for the country’s climate. In fact, most of the $391 billion (or more) in climate technology funding provided by the Inflation Reduction Act was only received when the relevant products (whether electric cars, massive solar panels, or spinning wind turbine blades) you can only pay when, when you go out. At least in part in the US, the legislation actually pays companies to manufacture their products domestically, all to make the country more self-sufficient in clean energy.
This policy quickly changed the economic viability of building clean energy equipment in the United States, attracting tens of billions of dollars of private investment from domestic and foreign companies hoping to profit from the clean energy boom.
“It is impossible to overestimate what has happened since the passage of the Inflation Reduction Act,” said Aaron Brickman, senior program director at RMI US Clean Energy think tank. â�<“美国现在实际上是清洁能源和清洁技术领域对全球资本最具吸引力的目的地。” â�<“美国现在实际上是清洁能源和清洁技术领域对全球资本最具吸引力的目的地。” “The US is now in fact the most attractive location for global clean energy and clean technology capital.” (Canary Media is an independent affiliate of RMI.)
Since President Biden signed the bill into law last August, the United States has announced more than 100 new clean energy businesses or plant expansions, with a total value of nearly $80 billion in new investment, according to Canary Media analysis. In the two months since this article was originally published, we have counted 20 more battery, electric vehicle, solar and wind power projects announced across the US.
Until now, companies have tended to build manufacturing facilities in several states. Much of this activity is concentrated east of the Mississippi River, from the Great Lakes to Georgia, known as the “Battery Belt”. While Michigan’s historic influence on the auto industry is still reflected in the battery and electric vehicle plans announced so far, the South has also become a bustling hub for the industry.
Solar energy production is also moving south. The planned plants are concentrated in Alabama, Georgia and South Carolina, as well as in Ohio and the solar giant Texas.
There have been 12 more clean energy projects announced, valued at over $8.5 billion, but they have yet to be discovered, so they are not shown on the map above.
RMI’s Brickman said some leading states have adopted a range of strategies to attract clean energy investment, such as offering state-level tax credits, providing ready-to-start sites, training workers and investing in infrastructure.
South Carolina, for example, is positioning itself as a place for the electric vehicle industry, in part because the state already employs 75,000 auto workers. In Georgia, the state now poised to receive the most investment in clean energy production, officials are touting low taxes, great universities, workforce development and low union levels, which upset union groups like the UAW.
The geographic proximity of these facilities can provide other benefits, such as cheaper transportation from the production site to the assembly plant. Manufacturing clusters in the Battery Belt and the South are also likely to benefit from a growing well-trained workforce and new educational programs designed to meet recruiting needs.
At least for now, it seems likely that most of the investment in manufacturing will go to communities represented by Republicans in Congress, who all voted against the Inflation Reduction Act.
As impressive as the state’s clean energy explosion has been, it wouldn’t have happened without significant help from abroad. Indeed, it is currently impossible for the United States to achieve its lofty Made in America goals without relying heavily on clean energy technology and foreign investment.
Since the passage of the Inflation Reduction Act, US companies have made less than half of their clean energy production announcements and only about a third of planned investments.
A year after the passage of the Inflation Reduction Act, the U.S. climate technology, energy, and auto sectors have already changed.
New plants are being planned to produce various clean energy components. Old factories are being reopened, reconstructed or expanded. According to analysis by Canary Media, new manufacturing investments such as electric vehicles, electric vehicle components, batteries, battery recycling, and wind and solar panel assembly amounted to nearly $80 billion.
Wind, solar and battery developers are planning a surge in deals and projects due to expanding tax incentives.
At the same time, companies are expanding, developing a new set of technologies, including carbon removal, green hydrogen, and new long-term storage.
But there is still a lot of debate and uncertainty about implementation, including how the subsidies will be structured, who will benefit from them, and whether the subsidies will be enough to keep supply chains in the United States going long term.
In this week’s edition of The Carbon Copy, we speak with three Canary Media reporters covering the long-term impact of the IRA: reporters Maria Gallucci and Julian Spector, and Director of News and Special Projects Jeff St. John.
Are you curious about how artificial intelligence will affect the energy business? On October 19, visit Transition-AI: New York to connect with utilities, top energy companies, startups, and AI experts. Use code pspods10 to get a 10% discount for our listeners.
Carbon Copy is backed by FischTank PR, a dedicated climate technology PR firm providing meaningful insights to companies in the edge of the grid, solar energy, energy storage, batteries, electric vehicles, alternative fuels, venture capital and green buildings. FischTank helps customers differentiate themselves in an increasingly competitive and noisy environment. Visit FischTank PR to find out more.
Post time: Aug-23-2023