Clean Energy Tax Credits Ignite Manufacturing Boom

Michigan’s Clean Energy Investment Boom Due to Federal Inflation Reduction Act

Michigan is stepping up its role in the auto supply chain as Our Next Energy begins lithium-ion phosphate battery production less than 30 miles from downtown Detroit. The state has also seen significant new clean energy investments due to the federal Inflation Reduction Act (IRA) of 2022.

The IRA offers tax credits for governments and private companies for clean energy projects. Since its enactment in August 2022, around 292 major new investments have been announced, representing almost $118 billion in private-sector investments. The IRA’s tax incentives have attracted major investments and increased job creation, regardless of a state’s stance on climate change.

Michigan’s Infrastructure Office and its Role in Harnessing IRA Opportunities

Michigan established an infrastructure office to ensure the state’s readiness to tap into federal grant opportunities presented by the IRA. The office assists state agencies with grant writing, provides matching funds required by some federal programs, and has a significant amount allocated to a competitiveness fund to complete projects.

Alongside infrastructure improvements, the state’s Department of Labor and Economic Opportunity has focused on workforce development. They have created an EV Jobs Academy to identify and develop the skills and qualifications needed for the expanding electric vehicle battery manufacturing sector.

IRA’s Impact on Clean Energy and Manufacturing Sector

The IRA has stimulated significant investments in the clean energy sector, leading to a resurgence of the U.S. manufacturing industry. States, cities, and companies are investing in renewable energy, with commitments to create new jobs and drive economic growth.

Tennessee, for instance, is becoming a leading supplier of lithium for the U.S. market, with Piedmont Lithium investing nearly $600 million in a plant, largely due to IRA incentives. The law also allows billions of dollars in rebates for residential energy-efficiency projects and home electrification.

While the IRA has political detractors due to its cost and focus on climate concerns, its impact on job creation and domestic manufacturing cannot be denied. U.S Steel CEO, David Burritt, called the IRA a spur to the return of domestic manufacturing, labeling it as “the most amazing thing we’ve seen in the United States for a very long time.”