Chart: GOP Targets Clean Energy Surge
TL/DR –
Since the Inflation Reduction Act was signed into law in August 2022, companies have invested around $320 billion into clean energy projects in the U.S. and plan to put in over $500 billion more for cleantech factories, low-carbon facilities, and renewable energy installations. Rhodium’s preliminary analysis suggests that a repeal of the law could result in 57-72% less clean energy added to the grid over the next decade, and 16-38% fewer electric vehicles on the road by 2035. The uncertainty of the Act’s future, along with existing instability from the Trump administration’s policies, has already led to manufacturers of clean energy technology abandoning projects at an unprecedented rate, with nearly $7 billion worth of projects being canceled in just the first quarter of the year.
Impact of Inflation Reduction Act on Clean Energy Investment in the U.S.
Post the Inflation Reduction Act’s enforcement in August 2022, companies have pumped nearly $320 billion into clean energy projects across the U.S. They have also outlined plans for an additional investment exceeding $500 billion into creating cleantech factories and low-carbon industrial facilities, along with solar, battery, and other renewable installations. Around 80% of this funding favoured Republican districts. Also, about three-quarters of the planned investment will head to these same areas.
Ways and Means Proposal Threatens Clean Energy Progress
The Ways and Means proposal, if enacted, could obstruct many of these planned investments and even jeopardize projects currently under construction or operation.
Implications of a Repeal Scenario on Clean Energy and EV Adoption
A preliminary analysis by Rhodium suggests that a repeal scenario would reduce clean energy added to the grid over the next decade by 57% to 72%. Furthermore, 16% to 38% fewer EVs would hit the road by 2035 than if the law remained intact.
Repeal Scenario Could Affect Demand for Cleantech Manufacturers
These declines in clean-energy and EV adoption could diminish demand for manufacturers planning to build factories for EV batteries, solar panels, wind transmission cables, and other cleantech products in the U.S. Such companies would need to reconsider the feasibility of their factories under an entirely new set of economic conditions.
Clean Energy Manufacturers Abandoning Projects
Already, due to trade and policy uncertainty under the Trump administration, clean energy technology manufacturers have been abandoning projects at an unprecedented rate in the post-Inflation Reduction Act era. Approximately $7 billion worth of clean-energy manufacturing projects were called off in the year’s first quarter itself.
House Ways and Means Proposal Faces Opposition
While the House Ways and Means proposal may not be enacted as is, with some Republican senators and representatives voicing their opposition; its aggressive nature is not helpful in restoring the confidence of companies already unsure about domestic clean energy projects in the chaotic Trump administration era.
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