Wednesday marks one year since President Joe Biden signed the Inflation Reduction Act, the marquee bill meant in large part to deliver on the administration's climate goals.
The law provided for $369 billion in new spending to help accelerate renewable energy projects in the U.S., increase electric vehicle manufacturing, and spur electric adoption — and, one year in, indications are that it could end up spending far more than that.
UP FOR DEBATE: TRUMP, DESANTIS, AND 2024 GOP HOPEFULS' STANCES ON EDUCATION
But critics say the law could lead to increased reliance on China or other countries at the expense of U.S. national security, or risk transitioning too quickly to renewable sources of electricity — threatening the reliability of the nation's power grids during times of peak demand or extreme energy events.
One year after its passage, here’s a breakdown of where the IRA funds have gone.
Wind and solar manufacturing
In the one year since Biden signed the IRA into law, the private sector has announced more than $110 billion in new investments to expand clean energy manufacturing projects, according to data shared this week by the Biden administration.
This includes plans to build or expand 83 clean energy manufacturing facilities across the country, including 52 solar projects, 14 utility-scale storage projects, 11 onshore wind projects, and six offshore wind projects, according to the American Clean Power Association, which released a report tracking the IRA earlier this month. The IRA provided tens of billions of dollars in subsidies for clean energy.
The group estimates those investments will create at least 30,000 manufacturing jobs in the clean energy sector and add 185 gigawatts of new clean energy capacity within the next three years.
“Our nation has demonstrated in the last 12 months what the private sector can do when it is supported by a strategy that is focused on innovation, strong capital markets, and America's workforce,” ACP CEO Jason Grumet told reporters Tuesday.
Still, permitting and transmission improvements are crucial if the U.S. hopes to continue to add new clean energy sources to its power grid, the ACP said.
Electric vehicles
The Inflation Reduction Act allocates $12.5 billion to extend and expand the electric vehicle tax credit program, which grants consumers up to $7,500 in subsidies to incentivize drivers to trade in their gas-powered vehicles for electric vehicles.
Electric vehicles currently account for roughly 7% of all cars sold in the U.S. A massive uptick in electric vehicle sales is necessary if the administration hopes to meet its target of having electric vehicles make up 50% of new car sales by 2030.
The IRA also set aside an additional $47 billion for electric vehicle manufacturing and battery production. These funds were used to finance DOE's conditional $9.2 billion loan to Ford and its manufacturing partner SK On for the build-out of three new electric vehicle battery manufacturing facilities in Tennessee and Kentucky, which were announced earlier this year. The facilities are expected to create roughly 5,000 construction jobs and 7,500 operating jobs once the sites are up and running.
Actual costs
Despite the law’s price tag of $369 billion tag for energy and climate spending provisions, more recent estimates have suggested its price tag could be roughly two or three times higher than that amount—adding up to $800 billion more in federal funds than originally projected.
Analysts have provided a range of explanations for the higher estimates, pointing to everything from higher-than-anticipated consumer interest in the tax credits and subsidies, to suggestions that the administration implemented the law in such a way as to allow subsidies to be more freely used.
An April Goldman Sachs analysis estimated the value of IRA incentives over 10 years at $1.2 trillion. Meanwhile, the University of Pennsylvania's Wharton School updated its estimate earlier this year, putting projected spending for the IRA’s energy and climate spending provisions at around $1.05 trillion through 2032.
According to that estimate, Penn Wharton projects that spending on incentives for clean cars and trucks will reach around $393 billion in the next 10 years — which by itself exceeds the original estimate for the entirety of the IRA's energy and climate-related provisions.
Reaction
Lori Lodes, the executive director of Climate Power, a campaign advocacy group helping bankroll a six-figure media ad buy to mark the IRA’s one-year anniversary, pointed directly to the IRA's success in funding what she described as a "clean energy boom" happening in the U.S.
“Investments made possible by President Biden’s clean energy plan are revitalizing communities and bringing back good-paying jobs. It’s imperative that we tell the stories of the workers across the country who have benefited from the Inflation Reduction Act and make sure Americans understand that our clean energy boom is just getting started,” she said in a statement.
Others aren’t so sure. According to a recent Washington Post-University of Maryland poll, more than half of Americans said they disapprove of Biden’s handling of climate change. And even fewer said they were familiar with the law itself — according to the survey, more than 70% of U.S. voters said they have heard either “little” or “nothing at all” about the Inflation Reduction Act.
Republican response
Meanwhile, Republicans have gone after the law for creating what they say will be an outsize reliance on China and other countries for electric vehicle battery materials and manufacturing.
The law is expected to be a focal point in the Republican presidential primary campaign, and former President Donald Trump has already vowed to reverse Biden’s clean energy policies if elected for a second term — lambasting what he described as Biden’s “Green New Deal atrocities" in a recent campaign video.
Former South Carolina Gov. Nikki Haley also vowed to roll back the Biden administration’s clean energy tax subsidies, accusing Biden of “demonizing” U.S. energy producers, while former Vice President Mike Pence took aim at the administration’s energy agenda in an op-ed last week.
Earlier this year, the Republican-led House voted to pass H.R. 1, the GOP’s marquee energy legislation that sought, among other things, to claw back $27 billion in clean energy spending from the IRA.
Still, many hurdles remain as the U.S. looks to massively boost its clean energy goals and reach its ambitious emissions reduction targets — including achieving net-zero emissions by 2050.
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
“The scale of this challenge is immense," John Hensley, the vice president of research and analysis at American Clean Powers, said Tuesday. "And while we are proud and delighted of the progress that's being made, we are also humbled by what we know has to happen in order to achieve real success."