It’s Been One Year Since The Inflation Reduction Act Was Signed, How Is it Doing?

It has been one year since the Biden – Harris administration signed the Inflation Reduction Act, a record setting bill that set out major investments in infrastructure, energy, climate, and domestic manufacturing. 

In the last 12 months:

• 272 new clean energy projects

• $122 billion in clean energy generation projects announced in the last year.

• $240 billion in new clean energy manufacturing investments

• 179,600 new clean energy jobs for US citizens

• 750k EVs were sold in the US, 57% more than 2021.

In the past year, clean energy manufacturing projects have been announced in states ranging from Nevada to South Carolina. States that are leading in clean energy manufacturing investments have used tactics such as providing state- level tax incentives, ensuring available sites, and training workers and investing in infrastructure. Historically, the US has benefited from direct foreign investment in the clean energy ecosystem, especially within the battery and wind energy space. In the last year, more than half of all manufacturing projects announced were from foreign and multinational companies. Due to the incentives to manufacture on US soil, a boom in partnerships between domestic and international companies has resulted.

Between the IRA and Bipartisan Infrastructure Law, the DOE estimates significant progress toward climate targets by reducing net U.S. greenhouse gas emissions to 35%-41% below 2005 levels in 2030. Which falls short of Biden's original 50% goal, but it eclipses the original track that the US was on prior to the IRA. Of the firms that have announced target production dates, nearly 70% of them aim to go live by the end of 2024. Most facilities that are aiming for a 2025 start date are battery plants such as the LG Energy Solution’s $5.5 billion Arizona factory.

What’s next for the IRA?

The pace of the energy transition within the US and the complete roll out of the IRA is dependent on companies taking advantage of the available funding, consumers’ willingness to electrify their lives, and how much political resistance the laws implementation will undergo. During the last 12 months, the Internal Revenue Service has been tasked with releasing guidance around the requirements companies and individuals must meet to receive IRA money. The process is moving forward slowly, and guidance is being released intermittently.

At the end of 2022, more than 2,000 gigawatts of generation and storage were waiting in interconnection queues throughout the country, projects now face an average wait time of five years to connect to the grid. On July 28, 2023 the Federal Energy Regulatory Commission announced new rules that will streamline the interconnection process for transmission providers, which will improve timing and cost certainty to interconnection customers.

The Inflation Reduction Act may be able to provide ample funding for clean energy and infrastructure projects, but it does not speed up the permitting process. Hundreds of pages, thorough analysis, and long-awaited timelines are stunting the deployment of numerous US based clean energy projects. For the IRA to be effective and efficient, multi-year-long permitting processes can no longer be normal. The Biden- Harris administration have proposed The Bipartisan Permitting Reform Implementation Rule, which would fully implement the statutory reforms to NEPA included in the Fiscal Responsibility Act, including clarifying the roles of lead and cooperating agencies, setting deadlines and page limits, and adding other requirements to ensure timely and unified environmental reviews.

In the last 12 months, the US has witnessed an explosion in clean energy investment due to the Inflation Reduction Act. To keep this momentum, the complete roll out of the bill will rely heavily on the outcomes of the 2024 election, permitting reform, and an increase in interconnection of transmission lines across the country.