ICYMI: One Year of President Biden's Inflation Reduction Act is Spurring Clean Energy Investment and Driving Historic Climate Action

Today, President Biden will travel to Wisconsin and on Wednesday he will mark the one-year anniversary of the Inflation Reduction Act, the largest investment in climate action in history. A key part of Bidenomics and President Biden's Investing in America agenda, this transformative law is lowering energy and health care costs for American families, driving a historic manufacturing and clean energy boom, and making the largest corporations pay their fair share.

As Justin Worland reports in TIME, the Inflation Reduction Act "will not only determine whether the U.S. meets its emissions reduction goals, but also shape the global economy for decades to come." And as Boise, Idaho Mayor Lauren McLean told TIME, "We're blessed by funding from the Inflation Reduction Act. It's allowing me to advance priorities that we had faster."

The Inflation Reduction Act positions America to achieve President Biden's goal of reducing emissions by 50-52% below 2005 levels by 2030. Faith Birol, the executive director of the International Energy Agency, told TIME: "I want to make it clear: the Inflation Reduction Act is the single most important climate action since the Paris Agreement in 2015."

In addition, the Inflation Reduction Act is unleashing a clean energy boom in every corner of the country.

As an executive at the energy company Enel told the New York Times, "There's a lot of appetite to invest in the United States thanks to that law." According to the Times, the executive added that "the plant his company is building in Tulsa would not exist without the Inflation Reduction Act."

See coverage below:

TIME: How the Inflation Reduction Act Has Reshaped the U.S.—and The World
[Justin Worland, 8/14/23]

In late July, I visited a steel mill in Gallatin, Ky., operated by the company Nucor. During my visit, I watched as the facility churned out massive rolls of low-carbon steel destined for use in renewable infrastructure. Nucor's stock price has increased nearly five-fold in the last three years, and the day before I visited the company had announced blockbuster profits citing, in large part, all the demand created by businesses racing to take advantage of money flowing from federal spending programs, including and especially the Inflation Reduction Act (IRA).

Kentucky is far from alone. Across the country, the IRA has spurred hundreds of billions of dollars in investment in clean technology. Lithium-ion battery makers are opening factories near auto industry hubs to serve the growing electric vehicle market. Solar manufacturers are setting up shop in red states like Georgia. And old-school oil companies are investing in hydrogen. "It's a transformation of the economy," says John Podesta, President Joe Biden's senior advisor charged with implementing the IRA.

The IRA, which will mark one year since its signing on Aug. 16, is a classic piece of D.C. lawmaking. It came about in a windy legislative process that began with a big campaign promise from Biden and ended with backroom deal-making on Capitol Hill. And it has an odd, misleading name with a funny acronym, to boot.

But while the law was born in D.C., to understand its impact you need to look outside the capital as it reshapes industry across the country and the world. From Miami to Mumbai, Boise to Brussels, wherever I've traveled in the last year, the IRA has been top of mind for policymakers, business leaders, and civil society. It will not only determine whether the U.S. meets its emissions reduction goals, but also shape the global economy for decades to come.

"I want to make it clear: the Inflation Reduction Act is the single most important climate action since the Paris Agreement in 2015," Fatih Birol, the executive director of the International Energy Agency, told me in May.

'Quick and immediate'
At the core of the IRA is a mantra oft-repeated by members of the Biden Administration: the law is designed to be private sector-led and government-enabled. Instead of introducing mandates, the IRA offers tax breaks to companies that deploy clean technologies.

The impact was swift. "It was quick, it was immediate, and it doesn't appear to be slowing down," says Greg Matlock, who leads EY's Americas Energy Transition practice. Matlock says that "within a week" of the law's passage he noticed "tangible movement on investments" from clients.

Companies have invested more than $270 billion in U.S.-based clean energy projects—think wind, solar, and battery—since the IRA became law, according to a report from the American Clean Power Association released earlier this week. Electric vehicle technology investment has totalled more than $130 billion, according to White House data. And the private sector is expected to spend trillions more to take advantage of the incentives in the law over the next decade. "People are deploying capital because of the IRA. If you talk to anyone in the finance world, where people are seeing uptake in capital formation is in the clean sectors," says Podesta. "And there's no question that the bill itself has spurred this."

The IRA has also convinced some longtime skeptics of the clean energy transition about the opportunity to make money with lower-carbon solutions. Even as oil and gas companies double down on their commitment to fossil fuels, for example, they have also allocated billions in the past year to pursue technologies like hydrogen and carbon capture that can take advantage of federal subsidies. ExxonMobil is even exploring getting into the lithium game, hoping to exploit its knowledge of drilling to make money off the transition.

The movement on big, capital-intensive projects in manufacturing and the power sector is easiest to see. But forward thinkers in other industries are also considering how IRA incentives can help their bottomline, from tax deductions for energy efficiency in retail space to tax credits for electrifying fleet vehicles. In April, I participated in a discussion with local business leaders in Milwaukee who were all clamoring to learn how their companies could take advantage of the IRA incentives. "Fuel cells, solar, heat pumps, clean vehicles, vehicle charging—there's something in there for everybody," said Chuck McGinnis, a vice president at Johnson Controls, a conglomerate that makes HVAC among other things, at the event.

All of this enthusiasm means that the federal government may end up spending a lot more on the law's clean-energy incentives than originally thought. Prior to the law's passing, Congressional backers citing the Congressional Budget Office and Joint Committee on Taxation estimated that the federal government would spend close to $400 billion on the law's climate provisions. A paper published in March by the Brookings Institution estimated that it could top $1 trillion as companies and consumers take advantage of the law's uncapped tax incentives.

A critic of the law might balk at the extra cost to the taxpayer, but there's another way to look at it: higher uptake means the law is working.

'Good jobs'
In late June, top officials from the Biden Administration fanned out across the country to make the case to the American public that the IRA and other policies are creating jobs and reinvigorating communities. They were armed with good news: a report from the Department of Energy showed that the U.S. added 114,000 clean energy jobs last year. Energy Secretary Jennifer Granholm visited a burgeoning corridor of electric vehicle manufacturing in the southeast that's become known as the "battery belt," for example, and Environmental Protection Agency Administrator Michael Regan traveled to Vermont to announce a new $7 billion grant program to provide solar power to low-income households.

"What we're going to do is go out and tell the story," says Podesta.

The cable news airwaves may be relatively quiet about the IRA, yet the trillions in investment catalyzed by it have undoubtedly begun to shape politics in the U.S. IRA supporters love to talk about green jobs in red states, particularly in the emerging "battery belt." Manufacturers of batteries as well as EVs, solar panels, and other technologies have clustered in red states like Kentucky, Tennessee, and Georgia, leading even some Republican officials, like Trump-aligned GOP Rep. Majorie Taylor Greene, to embrace clean energy when the components are being built in their backyard.

But beneath the surface the narrative gets more complicated. Many states winning the race for clean energy investment—think of say Georgia or Tennessee—appeal to companies in part because of their "business friendly" approach. That includes offering tax incentives to attract companies as well as laws that make it more difficult to form unions. The fast pace of the transition—particularly for automakers—has already raised concerns among workers. Ensuring that jobs created by clean energy investment are what Biden has called "good jobs" will be a continuing thread in the coming years.

Whatever wrinkles that need to be sorted out haven't stopped officials in red and blue states alike from clamoring for dollars from the law. Beyond the private sector investment, the law funds everything from climate resilience to environmental justice—and cities and states have an important role to play in implementing it.

In Boise in April, I attended a dinner with Mayor Lauren McLean who said the law can help the city achieve its goal of running its facilities on 100% clean electricity. "We're blessed by funding from the Inflation Reduction Act," she said. "It's allowing me to advance priorities that we had faster."

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One of the biggest questions that comes up on the road, especially outside the U.S., is whether the IRA would survive a future Republican administration and the whiplash that would accompany it. There's no question that a future Republican president might succeed at chipping away at the law around the edges, but early indicators suggest that, at its core, the law is here to stay.

Earlier this year, a contingent of Republicans whose districts are benefiting from clean energy investments pushed back when House Republicans proposed gutting the law as part of budget negotiations. Podesta likens it to the Affordable Care Act, the law passed under President Barack Obama that Republicans tried and failed to repeal: "Once these plants are built, once these jobs are created, it's going to be hard to reverse that."

The New York Times: The Clean Energy Future Is Arriving Faster Than You Think
The United States is pivoting away from fossil fuels and toward wind, solar and other renewable energy, even in areas dominated by the oil and gas industries.
[David Gelles, Brad Plumer, Jim Tankersley, Jack Ewing, 8/13/23]

Delivery vans in Pittsburgh. Buses in Milwaukee. Cranes loading freight at the Port of Los Angeles. Every municipal building in Houston. All are powered by electricity derived from the sun, wind or other sources of clean energy.

Across the country, a profound shift is taking place that is nearly invisible to most Americans. The nation that burned coal, oil and gas for more than a century to become the richest economy on the planet, as well as historically the most polluting, is rapidly shifting away from fossil fuels.

A similar energy transition is already well underway in Europe and elsewhere. But the United States is catching up, and globally, change is happening at a pace that is surprising even the experts who track it closely.

Wind and solar power are breaking records, and renewables are now expected to overtake coal by 2025 as the world's largest source of electricity. Automakers have made electric vehicles central to their business strategies and are openly talking about an expiration date on the internal combustion engine. Heating, cooling, cooking and some manufacturing are going electric.

The cost of generating electricity from the sun and wind is falling fast and in many areas is now cheaper than gas, oil or coal. Private investment is flooding into companies that are jockeying for advantage in emerging green industries.

"We look at energy data on a daily basis, and it's astonishing what's happening," said Fatih Birol, the executive director of the International Energy Agency. "Clean energy is moving faster than many people think, and it's become turbocharged lately."

More than $1.7 trillion worldwide is expected to be invested in technologies such as wind, solar power, electric vehicles and batteries globally this year, according to the I.E.A., compared with just over $1 trillion in fossil fuels. That is by far the most ever spent on clean energy in a year.

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In the United States, President Biden signed a trio of laws during his first two years in office that allocated unprecedented funds for clean energy: A $1 trillion bipartisan infrastructure law provided money to enhance the power grid, buy electric buses for schools and build a national network of electric vehicle chargers. The bipartisan CHIPS and Science Act set aside billions of dollars for semiconductors vital to car manufacturing. And the Inflation Reduction Act, which marks its first anniversary on Aug. 16, is by far the most ambitious attempt to fight climate change in American history.

That landmark law provided tax breaks related to electric vehicles, heat pumps and energy efficiency upgrades, solar panel and wind turbine manufacturing and clean hydrogen production. The government is also investing in efforts to capture carbon emissions and store them before they can reach the atmosphere, as well as technology that can remove them directly from the air.

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Combined, the three laws have prompted companies to announce at least $230 billion in manufacturing investments so far. In Georgia, a Korean solar manufacturer, Qcells, is building a $2.5 billion plant. In Nevada, Tesla is building a new $3.6 billion electric truck factory. And in Oklahoma, the Enel and Canoo facilities are primed to benefit from the Inflation Reduction Act, as is a new $4.4 billion battery factory being considered by Panasonic, the Japanese conglomerate.

"There's a lot of appetite to invest in the United States thanks to that law," said Giovanni Bertolino, an executive at Enel, adding that the plant his company is building in Tulsa would not exist without the Inflation Reduction Act.

Regulations are also hastening the energy transition. Mr. Biden has proposed tough new federal pollution limits on tailpipes and smokestacks, but several states are acting on their own. California, with market muscle that influences the entire auto industry, plans to halt sales of new gas-powered cars by 2035 and new diesel-powered trucks by 2036 — and a handful of states are following suit. In May, New York became the first state to ban gas hookups in most new buildings, requiring all-electric heating and cooking starting in 2026. Several cities, including New York and San Francisco, have similar prohibitions, although some Republican-controlled states have blocked their municipalities from banning gas.

Heavy investment by the United States has spurred a spirited reaction from other wealthy nations. Countries that initially complained that the United States was unfairly subsidizing clean energy manufacturers have since engaged in a sort of friendly subsidy race.

Millions of people around the country are making similar calculations. Electric vehicles are by far the fastest-growing segment of the auto industry, with record sales of 300,000 in the second quarter of 2023, a 48 percent increase from a year earlier. Teslas are now among the best-selling cars in the country, and Ford has expanded its production of the F-150 Lightning, the electric version of its popular pickup truck, after a surge of initial demand created a waiting list.

Concerns among consumers about the availability of charging stations as well as the cost of some models have helped to cool sales somewhat, leading some automakers to slash prices. Still, federal tax credits of up to $7,500 have made the least expensive electric vehicles competitive with gas-powered cars. And about two dozen states offer additional tax credits, rebates or reduced fees, further pushing down their cost.

Government action is also helping heavier vehicles go electric. Sales of electric school buses are soaring, largely because of $5 billion in federal grants that can cover 100 percent of the cost for low-income communities. The Postal Service plans to spend nearly $10 billion to purchase 66,000 electric mail trucks — roughly 30 percent of its fleet — over the next five years.

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"It is not a red-state, blue-state thing," said Cathy Zoi, EVgo's chief executive. "It is a national phenomenon."

In an unusual move, seven carmakers — BMW Group, General Motors, Honda, Hyundai, Kia, Mercedes-Benz Group and Stellantis — are spending $1 billion in a joint venture to build 30,000 charging ports on major highways and other locations in the United States and Canada.

[…]

The Guardian: Green investment boom and electric car sales: six key things about Biden's climate bill
The $369bn Inflation Reduction Act has boosted clean energy and EV cars, but the politics remain difficult
[Oliver Milman, 8/11/13]

The US' first serious legislative attempt to tackle the climate crisis, the Inflation Reduction Act, is hitting its first anniversary both lauded for turbocharging a seismic shift to clean energy while also weathering serious attack from Republicans.

Joe Biden hailed the bill, which despite its name is at heart a major shove towards a future dominated by renewable energy and electric vehicles, as "one of the most significant laws in our history" when signing it on 16 August last year.

And the White House is trying to use the first year marker to extol it as a pivotal moment in tackling the climate emergency.

"It's the largest investment in clean energy in American history, and I would argue in world history, to tackle the climate crisis," John Podesta, Biden's chief clean energy advisor, told the Guardian. "With any legislation it takes time to get traction, but this is performing above expectations."

Podesta said there has been an "enormous response" in take-up for the tax credits that festoon the $369bn bill, directed at zero-carbon energy projects such as solar, wind and nuclear, grants for bring renewables manufacturing to the US and consumer incentives to purchase electric cars, heat pumps and electric stoves.

Here are the key points to know about the impact of the act so far as it approaches its anniversary on August 16:

1) A boom in clean energy investment
There has been around $278bn in new clean energy investments, creating more than 170,000 jobs, across the US in the first year of the Inflation Reduction Act, according to an estimate by the advocacy group Climate Power. The White House claims that there will be twice as much wind, solar and battery storage deployment over the next seven years than if the bill was never enacted, with companies already spending twice as much on new manufacturing facilities as they were pre-IRA.

"It's been more impactful than I or other observers would've thought," said James Stock, a climate economist at Harvard University.

Stock said that while the Inflation Reduction Act won't by itself eliminate planet-heating emissions in the US, it is the "first substantive step" towards doing so and should help propagate the next generation of hoped-for clean fuels, such as hydrogen, in its 10-year lifespan. "As the tax credits are uncapped, too, we will see a lot more invested than we expected," he said. "We could easily see $800bn to $1.2tn."

2) More people are buying electric vehicles
The Inflation Reduction Act includes rebates of up to $7,500 for buying an electric vehicle, and this incentive appears to be paying off – EV sales are set to top 1m in the US for the first time this year. Moreover, over half of US drivers are considering an EV for their next purchase, polling has shown. […]

3) It will slash US emissions, but not by enough
The US is the world's second largest emitter of greenhouse gases and the Inflation Reduction Act is widely forecast to slash these emissions, by as much as 48% by 2035, from 2005 levels, according to one analysis. […]

4) The IRA has so far escaped Republican cuts – but Biden is fighting to get credit
The legislation was a breakthrough moment following decades of obfuscation and delay by Congress despite increasingly frantic warnings by climate scientists over global heating, with the bill itself borne from months of torturous, comprise-laden negotiations with Joe Manchin, the coal baron senator from West Virginia who held a swing vote for its passage.

But the legislation has already faced the threat of repeal from Republicans, who universally voted against it, with the GOP's first bill after gaining control of the House of Representatives this year gutting key elements of the Inflation Reduction Act. This is despite the majority of clean energy investments flowing to Republican-led districts. […]

"We are going at a record clip to try to address this climate crisis," said White House adviser Podesta. "I know people want us to hurry up and I wish we could produce a net zero economy immediately but this is a global transition that's never occurred in human history. We need to get this job done." […]

Clean energy investment has gone to red states
No Republican voted for the Inflation Reduction Act but most of the investment that has been triggered by the bill has been funneled into projects in GOP-held Congressional districts. An emerging 'battery belt' is forming in the US south, with battery and electric vehicle plants popping up in states such as Georgia, Tennessee and Texas.

"The IRA has been absolutely critical for us in terms of giving market certainties to go bold and big in our investment," said a spokeswoman for QCells, a solar manufacturer that has embarked upon a major expansion in Georgia.

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