The Inflation Reduction Act funnels billions into America to encourage clean energy technology development and deployment, something businesses can take advantage of.
Signed into law in August, the IRA provides $385 billion in funding for clean energy production and addressing climate risk over the next 10 years. It gives businesses a tax deduction for energy-efficient commercial buildings. It provides tax credits until 2024 for electricity generation from renewable resources such as wind and investments in energy properties such as solar.
It aims to boost the US clean energy supply chain by encouraging domestic production of clean energy technologies and by offering tax incentives for US companies to manufacture products such as carbon capture systems and offshore wind components.
According to Zach Friedman, director of federal policy at the sustainability nonprofit Ceres, the bill is “all carrots, no sticks.” He said the bill emphasizes domestic clean energy manufacturing and deployment, and ensuring that the cost of clean energy use remains minimal for businesses and consumers.
He said the IRA provides industrial decarbonization grants and financing, as well as funding for purchases from the government for clean energy products.
This bill is a significant, historic investment in both the supply and demand sides and across industries.
Zach FriedmanDirector of Federal Policy, Ceres
“This bill is a monumental, historic investment in both the supply and demand sides and across industries,” Friedman said.
Effects of Inflation Reduction Act
Friedman said the IRA will drive significant development of the domestic clean energy technology supply chain as well as technology deployment. The bill’s incentives and guarantees in certain areas of funding for 10 years would encourage private investment in the clean energy market, he said.
Friedman said investing in the clean energy technology supply chain is important, especially given the supply chain challenges highlighted by the COVID-19 pandemic and global conflicts.
“It provides stability and accessibility to be able to make goods available in the market at an affordable and stable rate,” he said.
The IRA also invests in clean energy jobs, which Friedman believes will help fuel support for clean energy nationwide. It increases the tax credit to 10% for businesses setting up clean energy projects in communities that previously relied on extracting and processing energy sources such as coal and natural gas for employment.
Friedman said the bill is a “signal ahead and certainty” from the government on the size and growth trajectory of the clean energy market.
“In 10 years, because of all this investment and deployment, I think it’s going to accelerate a lot of investment in innovation, and we’ll get a lot of new technologies,” Friedman said. “It’s incentivized to produce in areas with well-paying jobs that require that investment.”
Challenges to clean energy development remain, use
The Inflation Reduction Act will result in benefits, such as reduced carbon emissions and R&D in emerging clean energy technologies, said Devin Hartman, policy director for energy and environmental policy at the R Street Institute, a non-profit public policy research organization. the gain.
However, Hartmann said the IRA doesn’t get to the root of the issue when it comes to clean energy deployment — the challenges facing the energy regulatory structure.
Hartmann said there is a significant appetite for clean energy and carbon reduction in private markets. But those markets are stalled due to loopholes in the current regulatory framework. It takes years for new energy processes to be allowed and connected to the grid, which Hartmann said is one of the main reasons private developers are not deploying more clean energy technologies.
It is also challenging for renewable energy developers to replace conventional energy suppliers in a cost-effective manner due to the aging power market, he added.
“They cite excessive grid congestion as an impediment to growth, with our transmission system having to fix for the better part of a decade to implement,” Hartmann said. “The regulatory rules that assign grid reliability values to resources are also in a state of flux, creating uncertainty over clean energy revenue streams.”
Hartmann said changes to power transmission regulation are important for clean energy in the long term.
“The biggest headwind of clean energy remains with the passage of the IRA,” he said. “Resolving them requires fixing complex regulatory systems that reduce barriers to new projects while strengthening competition and consumer choice.”
Makenzie Holland is a news writer covering big tech and federal regulation. Prior to joining TechTarget, she was a general reporter for Wilmington Starnews And on a crime and education reporter Wabash Plain Dealers,
