How the Ira is Transforming American Infrastructure

Jigar Shah is arguably the most informed voice in energy as the former head of the U.S. Department of Energy (DOE)'s Loans Programs Office. In his article he broke down the economic risk of the Trump Administration freezing obligated funds from the Inflation Reduction Act (#IRA) and Bipartisan Infrastructure Law (#BIL): "Two key policies the #Trump Administration guidance seems to suggest derailing, the IRA and BIL, have catalyzed over $1 trillion in private sector investments in U.S. manufacturing and clean energy, commitments to build 900 factories, and more than 400,000 new jobs as of January 2025. The vast majority of these investments benefit areas of the country will strong support for President Trump. As of August 2024, 60% of IRA-funded projects are in Republican districts, representing 85% of total IRA investments and 68% of new jobs. #Georgia, #NorthCarolina, #SouthCarolina, #Michigan, and #Indiana have received the most IRA funding, transforming their economies and creating a projected $29 billion in GDP and 144,000 jobs in these five states alone by 2030. The commercial success of this current cohort of government-supported projects and businesses will define both the category and the broader asset class for the next decade. Efforts to overhaul or repeal these policies–such as the recent OMB guidance–would reverberate throughout the U.S. and global economy. A full repeal of the IRA is projected to “harm U.S. manufacturing and trade and create up to $80 billion in investment opportunities for other countries, including major U.S. competitors like #China. U.S. harm would come in the form of lost factories, lost jobs, lost tax revenue, and up to $50 billion in lost exports." Per another estimate, IRA repeal would decrease U.S. GDP by $250 billion by 2035, lead to 1.3 million fewer jobs, and increase household energy spending by $35 billion." It's hard to fully state the impact this funding freeze would have on our economy - and we're just talking about energy. 📣 We need to be sharing this information with key stakeholders, including Members of Congress that represent states and districts affected by the funding pause and potential rescissions 📣

The Inflation Reduction Act has reached its second anniversary, and the impacts of the legislation are becoming evident as federal guidance is issued on its provisions and tax incentives spur private investment. In 2024, 41 major clean energy projects have been announced, alongside $12.6 billion in private investment. The IRS has issued final guidance on key IRA provisions, including prevailing wage, apprenticeship requirements, and tax credit transferability. Additionally, the IRS proposed guidance for the 48E and 45Y technology-neutral credits and clarified what qualifies as an energy community. The finalized tax credit transferability guidance has helped drive the clean energy tax credit market. The IRA is anticipated to be a long-term stimulus for the clean energy sector, especially with the introduction of the 48E and 45Y credits, which will replace existing tax credits and phase out by 2032 or when U.S. carbon emissions reach 50% of 2022 levels. The IRA is also driving a clean energy manufacturing boom, but industry sectors are divided on associated trade policies. The solar industry, for example, is split over a petition to impose duties on solar cell imports from several countries in Asia. High interest rates, which remain at a 23-year peak, are impacting the clean energy sector. Companies are focusing on increasing revenue and improving margins to cope with the higher cost of capital. Developers are adapting by connecting new generation projects directly to industrial facilities to speed up project timelines and improve economics. The first year of the IRA saw rapid movement by private capital to take advantage of new tax credits, while 2024 highlights the flow of IRA funds to states, municipalities, and not-for-profit entities. Programs like the EPA’s $27 billion Greenhouse Gas Reduction Fund are beginning to be implemented, with 47 states using planning dollars to produce climate action plans. Regardless of future political outcomes, the impacts of the IRA to the renewables industry are being seen. Certainly, states will play a central role in the success of many of the IRA’s funds. #RenewableEnergy #IRA #EnergyTransition https://lnkd.in/g_Gyn-_K

This week the Inflation Reduction Act turned two. Here's what we know and don't know, and what I'm particularly focused on going forward. (All of the data here are informed by the latest quarterly release from our MIT/Rhodium Clean Investment Monitor: https://lnkd.in/eTGTPuTi). The topline is two years of record breaking private investment in clean energy. Far beyond what most analysts projected. Clean investment is up 71% in the two years since the IRA was enacted. Total private investment over those two years was $493bn. Virtually no one had "nearly a half trillion dollars" on their bingo card in 2021. One of the notable things about this surge is that clean investment for the first time is really driving the trend in overall private investment in the U.S. economy. To make that specific: over this two year period, clean investment was responsible for more than half of the total private investment growth, economy wide. Clean investment in Q2 represented 5.5% of total US private investment in structures, equipment, and durable consumer goods in the United States, up from 1% five years ago. The dominant driver of this clean investment surge is manufacturing and innovation. Since the IRA passed, we've seen $89 billion invested in new or expanded facilities, up 400% over the pre-IRA period. The EV supply chain represents the majority of this investment – but solar has seen the largest percentage growth (10x), with QCells and other companies driving investment into an American solar supply chains. In the wake of the IRA we have also seen burgeoning markets for new technologies necessary for the clean energy transition. Investment in carbon capture, clean hydrogen, sustainable fuels is up 13x, as these technologies transition from R&D to commercial phases. One of the things we still don't know is what is driving consumer adoption and deployment of key technologies like heat pumps. The data we have, for example, suggest that only a small share (~10%) of heat pump installations are taking advantage of the IRA's tax credits. We have work to do to unpack what is going on here, and what we can do to make these policy tools more effective. There’s certainly some data that also give me pause -- and are reinforcing my concern about supply side barriers to build in the US. Investment in wind deployment is running at half the pre-IRA level. We’re not deploying clean electricity at the rate needed to keep apace with emissions goals. Both manufacturing and energy & industry announcements are down year on year (67% and 20%, respectively). This will be key to watch over the coming months. There’s a host of other findings to dig into: What’s the geographic uptake of the clean energy tax credits? How is project implementation and construction going across the country? Will emerging technologies – nuclear, geothermal, hydrogen, carbon capture – scale fast enough? I’m curious to hear your reactions, feedback, and input.