Since President Joe Biden’s Inflation Control Act (IRA) was passed in 2022, the United States has doubled the pace of reducing carbon emissions, with more than 80 solar It says power generation, wind power and energy storage projects are taking advantage of the law’s combination of direct payments and energy storage projects. Tax deduction.
The IRA and the Bipartisan Infrastructure Act provided $239 billion for clean energy, electric vehicles (EVs), building electrification and carbon management in the United States last year, an increase of 38% from 2022, said the IRA’s joint project on Clean Energy.・Revealed by Investment Monitor. policy researchers Rhodium Group and MIT; Still, experts said the law has a long way to go to meet Biden’s broader climate goal of net zero by 2050.
Ultimately, analysts expect direct U.S. government spending and tax credits under the law to far exceed the $400 billion initially expected. Goldman Sachs Group predicts up to $1.2 trillion in spending by 2031.
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Two years after the passage of the landmark climate change bill, early winners have been sectors such as electricity, battery manufacturing, and traditional clean energy such as wind and solar. The law encouraged Asian and European companies to increase investment in the United States, causing Europe to develop its own green industry plans over concerns that the United States would poach clean energy projects and talent. Ta.
Still, state and local regulations have hindered the development of new power lines, and new EV charging stations are not proliferating as quickly as some had hoped. The IRA has also been far behind in encouraging other types of projects, particularly hydrogen, carbon sequestration, geothermal and nuclear energy, said Jigar Shah, director of the Department of Energy’s Office of Financing Programs.
Shah told the CERAWeek energy conference in Houston last month that these sectors “continue to struggle with figuring out exactly how all the pieces should come together.”
Solar panels on the roof of a home in Lockport, Massachusetts, June 6, 2022. While US energy laws have encouraged investment and development in solar power technology, other sectors such as hydrogen and geothermal energy have not seen as much growth. (Reuters/Brian Snyder/File Photo)
Oil companies are pushing back against the criteria for tax credits for hydrogen fuel plants. ExxonMobil CEO Darren Woods warned in an interview that the company could cancel its multibillion-dollar plan to build the world’s largest hydrogen plant in Texas.
“The challenge is to translate IRA legislation into regulation,” Woods said, noting that the proposed regulations prioritize hydrogen fuel from renewable energy-powered power plants rather than natural gas. did.
Jason Bordoff, founding director of Columbia University’s Global Energy Policy Center, said that even in areas like electric vehicles, companies are discovering “many real barriers to making IRA tax breaks work.” .
For example, he cited a lack of power lines to connect new clean energy projects to the grid and local content requirements for EVs.
The law’s tax breaks on EV purchases have U.S. automakers worried that cheaper Chinese-made cars will flood the market, triggering U.S. content controls and prompting higher tariffs in Washington. There is. China has lodged a protest with the World Trade Organization against the US content regulations regarding EVs.
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Concerns about Asian companies cornering the market in advanced technologies needed for electric vehicles and other green energy products also prompted the U.S. government to start investing aggressively in semiconductor factories.
“Some clean energy sectors, such as electric vehicles, have become particularly politicized. There may be a risk that the administration will be delayed in implementing the IRA,” Bordoff said.
So far, the $7.5 billion U.S.-funded network of electric vehicle charging stations has installed only a small number of stations, despite a temporary exemption from U.S. content regulations.
Roman Kramarchuk, head of climate markets and policy analysis at S&P Global Commodity Insights, said regulatory hurdles are preventing oil companies from moving forward with the complex projects they love, such as hydrogen plants and carbon capture systems for oil wells. he pointed out.
He predicts there will be a second wave of development on these projects “when there is more certainty about how financing will occur or what is required to complete the transaction.” did.
Oil company executives at the Houston conference also complained that regulations are making it harder to build new natural gas pipelines and hurting efforts to remove gas from drilling sites.
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Now, ConocoPhillips CEO Ryan Lance said the proposed IRA-related fee for excess methane emissions on federal lands raises new hurdles, calling the issue “an industry pushback. There is,” he added.
Despite various complaints from industry, the climate change law has enabled the United States to reduce carbon dioxide emissions by 4% per year, double the 2% annual pace before the law, according to nine U.S. The research team described this in a paper published in the journal Science last year. . Still, some experts say the pace needs to accelerate.
‘The IRA is doubling the pace of cuts, but it should have tripled the pace to meet its 2030 climate change targets and put us on the path to net zero by 2050,’ says the study. said one of the participants, Jesse Jenkins, professor of mechanical and aerospace engineering at Princeton.
