Our world has undergone significant changes in just a few years. Clean energy no longer requires political intervention to survive, while fossil fuels desperately seek political support to combat market forces. The infrastructure bill and the Inflation Reduction Act, along with larger market and cultural momentum, have effectively reversed the status quo.
A few months ago, I speculated that the influx of investment driven by the I.R.A. could accelerate the depolarization of green energy in America, particularly as funds flowed into red states and districts.
Of course, the path was never going to be without its obstacles. The recent Texas standoff was just one of the bumps in the road. There have also been attempts by Republican lawmakers to sabotage the I.R.A. tax incentives, as well as challenges from state legislatures and attorneys general against socially conscious investments. However, in the grand scheme of things, these are merely minor setbacks.
The shift towards renewable energy predates the effects of the I.R.A. In fact, solar power is already 33 percent cheaper than gas power in the United States, while onshore wind is nearly 45 percent cheaper, as reported in a Bloomberg analysis from last year. American investors have been predominantly drawn to opportunities in red states like Texas. Before the passage of the bill, Bloomberg analyzed green energy investment in 2022 and discovered that out of the 14 congressional districts with the most renewable energy capacity, 13 were represented by Republicans and only one by a Democrat. This seemingly counterintuitive trend is logical, considering that over two-thirds of America’s renewable potential is located in predominantly Republican rural areas.
The I.R.A. has further accelerated these dynamics. Originally estimated at $370 billion, this legislation could potentially yield more than a trillion dollars in federal subsidies. Already, we are witnessing an unprecedented manufacturing boom, with new construction measures nearly doubling year over year and projections indicating further growth. According to Canary Media, there have been almost a hundred new clean energy manufacturing facilities or expansions, amounting to over $70 billion in new investment. Brian Deese, the former director of President Biden’s National Economic Council, highlighted this remarkable progress last month:
Companies in the United States have announced the development of at least 31 new battery manufacturing projects, surpassing the combined total of the previous four years. By 2030, the pipeline of battery plants will have a capacity of 1,000 gigawatt-hours per year, 18 times the energy storage capacity in 2021. This will support the production of 10 million to 13 million electric vehicles annually. In terms of energy production, companies have announced 96 gigawatts of new clean power in the past eight months, exceeding the total investment in clean power plants from 2017 to 2021.
As advocates for decarbonization, we find satisfaction in these developments and relief from the environmental consequences of inaction. However, it is important to note that this is not a definitive victory.
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