US climate law has spurred potential $125bn clean energy investment bonanza

“These projects will help give us the tools we need to reduce carbon emissions that are driving climate change, while continuing to grow our economy,” said Michael Timberlake, E2’s communications director.

How many of these announcements will result in actual investments remains to be seen. This is a particular concern for electric vehicles which face consumer resistance due to high prices, performance issues, and range anxiety, and solar given the flood of cheap Chinese products that could make future plants here unprofitable.

The Inflation Reduction Act (IRA) was initially estimated by President Joe Biden’s administration to include about $369bn of federal funding for clean energy tax credits and climate-related spending over a 10-year period.

The non-partisan Congressional Budget Office now projects the law’s provisions will cost more than $800bn from 2023 through 2033, while investment bank Goldman Sachs estimates up to $1.2trn.

The lucrative tax incentives have acted as a magnet to lure dozens of Asia, Canadian, and European companies to the US clean energy market, or invexst to expand their presence here.

By sector, EVs top clean energy investment announcements ($81.4bn) with creation of 62,525 related jobs, followed by battery/storage ($41.6bn), most related to EVs, that will create 24,700 jobs.

The Carolinas and Georgia in the southeastern US have been the biggest winners among the 50 states thus far for post-IRA clean energy investment notices. North Carolina will obtain $19.7bn, Georgia $15.3bn, and South Carolina $14.5bn.

Those combined outlays totaling almost $50bn will create roughly 40,200 jobs, although others will likely also be created indirectly. This suggests, at least for now, the transportation sector will generate most potential new clean energy employment, not solar, wind or other renewables.

As well, the Carolinas and Georgia are so-called “right-to-work” states, meaning their residents have the right to work for a living without being compelled to belong to a union.

Organised labour is a longstanding constituency in the ruling Democratic Party whose support Biden has aggressively sought to cultivate as part of his bid for reelection to a second, four-year term. While he has backing from most union leaders such as those in the automotive sector, rank-and-file members are divided between him and Trump.

Biden has repeatedly said that his ambitious clean energy and climate policies will create a bonanza of green “good-paying union jobs.” Thus far, the largest investment announcements are in states where unions do not have significant presence and/or political influence.

Two exceptions are Michigan where companies have announced $12.2bn clean energy-related investments and Ohio ($7.1bn).