On August 16, 2022, the Biden administration enacted the Inflation Reduction Act (IRA), a key piece of legislation that seeks to spur the development and competitiveness of “clean” energy in the United States. As part of this emphasis, the administration targeted improvements to and emphasis on climate and energy policies, which are at the heart of the IRA. At a high level, the IRA includes provisions addressing (i) new taxes, (ii) incentives like subsidies and grants for energy and other companies, (iii) and new funding for regulatory agencies and communities for activities like monitoring, public input and permitting.
Critically, the IRA provides $369 billion to energy and climate change-related issues over a 10-year period, the most significant investment in climate and clean energy policy issues in the U.S. to-date.
The IRA is a year-old (one year into the 10-year period), and its benefits for clean energy are still nascent. However, some sources are reporting early signs of success. In the July 23, 2023, Climate Power 1-year IRA anniversary report, relying on public data, report identified more than 170,600 new clean energy jobs for electricians, mechanics, construction workers, technicians, support staff, and many others. Publicized clean energy plans include:
- 91 new battery manufacturing sites
- 64 new or expanded EV manufacturing sites
- 84 new plans for wind or solar manufacturing sites
Biden’s administration placed most of the projects in five states, namely: Michigan, Georgia, South Carolina, California and Texas.
Spurred growth. BlueGreen Alliance and the Political Economy Research Institute at the University of Massachusetts Amherst say the IRA will create over 9 million clean energy and climate-related jobs over the next decade. It has been widely reported that the IRA would allot tax credits that will pay one-third the cost of U.S.-manufactured battery cells and packs.
Uncertainty in Congress. The IRA can be successful at spurring investment in clean energy only if its clean energy incentives remain unrepealed. But in the U.S. Congress, we’re already seeing legislative attempts to repeal certain IRA provisions (such as clean energy tax credits).