The recently passed Inflation Reduction Act (IRA) is a landmark legislation in the U.S. decarbonization and climate resilience efforts – on a much larger scale than any other climate measures in the past.
The IRA brings hope for a healthy environmental future here in the U.S. With goals such as lowering the cost of clean energy through improving the stability of solar tax credits for developers, and empowering communities and businesses to build up a clean energy economy, this legislative act holds promise to be impactful for the future of clean energy.
Where the IRA Helps: This legislation matters for several reasons
Aiming to address emission increases and public demand for more renewable energy resources
The IRA aims to reduce emissions, aligning with the growing demand in public sentiment to prioritize the development of renewable energy sources, such as wind and solar:
● The rise in wind and solar generation met over 75% of the demand growth in the first half of 2022, according to the mid-year insights report by Ember.
● Most Americans believe the United States should prioritize the development of renewable energy sources, such as wind and solar, and take steps toward
becoming carbon neutral by the year 2050.
Much of the bill’s provisions can be described as demand-pull policies, which promise a market for clean energy products. It offers tax credits for purchases of clean energy and EV cars that will significantly increase the demand for electricity. It also includes subsidies and rebates that make clean energy cheaper for consumers.
Some provisions are supply-push policies offering low-interest government loans and tax credits for new factories and clean energy projects, which have already begun breaking ground.
The White House emission reduction projection (about 40 percent by 2030)
The White House projects it will decrease U.S. greenhouse gas emissions by about 40 percent by 2030, reducing about one gigaton. According to The White House, this equates to ten times more climate impact than any legislation ever enacted.
Strengthening US competitiveness in clean energy innovation and scale
The IRA benefits the climate and strengthens US competitiveness in clean energy innovation and scale. Princeton Zero Labs REPEAT Project estimates that “The IRA would drive nearly $3.5 trillion in cumulative capital investment in new American energy supply infrastructure over the next decade (2023-2032).”
● According to The White House, the deficit is projected to fall by more than $1.5 trillion this year after falling by more than $350 billion last year.
● In addition, the bill’s deficit reduction, combined with other aspects of the
legislation, would diminish inflation and recession risks, according to the non-political Council for a Sustainable Federal Budget. [The committee also states that] the legislation would save $1.9 trillion in federal deficits over 20 years.
● According to the nonpartisan energy and climate firm Energy Innovation, the bill would create around 1.5 million new jobs and boost GDP by 0.84 to 0.88 percent by 2030. (Primary Source /Additional Source)
So what’s missing?
The above benefits of the IRA, while clearly impactful in positive ways, still leave gaps where greater progress needs to occur.
HST’s mission is precise; to scale clean energy across the globe to reduce the impact of the climate crisis. While the passing of the IRA is an important step forward and beneficial in many ways, it is not the sole solution to reaching a zero-carbon world.
There is an opportunity for legislative evolution to help bridge the gap between private sector entities, like those taken by HST, and collective federal action to truly address the clean energy needs of today. Prior to the IRA, energy prices were rising due to a supply-demand imbalance because of constrained supply. The IRA demand-pull policies could balloon demand in such a way that the imbalance would get worse, especially in the short term. However, if clear actions are taken using supply-push policies to bring on supply at a commensurate rate using digital platforms such as View®, there is a path toward reducing energy prices. These supply-push policies include clean energy tax credits and incentives to increase renewable-specific transmission and distribution infrastructure.
The immense investment in clean energy benefits the US to be competitive in the energy space, but 40% by 2030 is not enough to reach a zero-carbon economy.
The Growing Clean Energy Economy Needs View ® + IRA
HST believes that the quality of projects is critical to get to breaking ground for construction. It is the minimum viable step to ensure enough actual electricity supply gets added to reduce prices significantly as demand increases with the enactment of the IRA.
Our View ® platform helps sort out the pending high volume of clean energy projects that will be modeled to ensure project quality alongside the increase in project quantity. With the IRA, these projects are on their way to extended and richer investment tax credits.
|For developers looking to reap the
maximized incoming benefits of the IRA, connect with our team to discuss joining the View ® platform to get started on the next clean energy project.
|For energy buyers, connect with us to get started on fast clean energy procurement from best-in-class optimized projects.