President Joe Biden says that by 2030, his administration wants to reduce greenhouse gas emissions in the United States by 50% from 2005 levels.

Surprisingly, however, the seed capital made available by the Inflation Reduction Act to reduce greenhouse gas emissions is flowing disproportionately to states controlled by the Republican Party. The GOP opposed the Inflation Reduction Act.

As a general matter, the Democratic Party sees climate change as an existential threat. Republicans do not. For Republicans, climate change is not a political priority.

So why are new green energy investments flowing to Republican states?

The answer is straightforward, capital flows to the highest returns. Business exists to make a profit. More investment will take place when the opportunity for profit is higher. Broadly speaking, land is less expensive in red states than blue states. Southern states have greater exposure to sunlight which makes solar power more economical. Labor is less expensive in red states. All Southern states are "right-to-work" states where labor can choose not to be represented by a union. Nonunion labor is not a cartel. Nonunion labor is cheaper than union labor. Red states also more willingly provide financial incentives for new businesses to locate in their states. And the regulatory touch in Republican states is generally lighter than in Democratic states.

Complying with regulations is a cost of business. Lower regulatory costs translate into higher profits and higher investment. New green energy investment flows south because infrastructure in the South is constantly improving. Cartel construction unions do not make infrastructure improvements exorbitantly expensive. The Port of Savannah in Georgia is the third-busiest in the U.S. The size and depth of the harbor are being increased. Atlanta’s Hartsfield-Jackson Airport continues to expand. It is among the world’s busiest airports. It connects to most geographies of the world. From Atlanta’s airport, business can reach 80% of the U.S. population within two hours.

Green energy business knows it can obtain necessary business inputs efficiently and that it can distribute green energy outputs efficiently by air, sea, road, and rail.

Put simply, it is cheaper to do business in Republican states. Money flows to the highest returns.

James Rogan is a former U.S. foreign service officer who later worked in finance and law for 30 years. He writes  a daily note  on finance and the economy, politics, sociology, and criminal justice.