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Lucrative tax incentives have spurred an increase in the number of solar panels but have failed to breathe life into wind power, according to knowledge of a new project.
By Jim Tankersley
Reporting from Washington
Private investment in blank energy projects like solar panels, hydrogen power and electric vehicles surged after President Biden signed a sweeping climate bill last year, a progression of how federal tax incentives and subsidies have helped reshape some consumer and business spending in the United States. .
New data released Wednesday suggests that the climate law and other elements of Biden have helped fuel the growth of automotive supply chains in the American Southwest, strengthening classic car production hubs in the commercial Midwest and Southeast. The 2022 law, passed with only Democrats, helped business investment in conservative strongholds like Tennessee and the crucial states of Michigan and Nevada. The law has also helped fund a wave of spending on electric cars and solar panels in California, Arizona and Florida.
The knowledge that in the year following the approval of the meteorological law, spending on electric power technologies represented 4% of the country’s total investment in structures, appliances and durable goods for the client, more than double that of 4 years ago.
So far, the law has failed to breathe life into a key industry in the transition to fossil fuels that Biden seeks to accelerate: wind power. Domestic investment in wind generation has declined over the past year, despite strong climate law incentives for producers. And so far, the law has not replaced the trajectory of consumer spending on certain energy-efficient technologies, such as high-efficiency heat pumps. .
But the report, which extends to the state level, provides the first detailed review of how Biden is affecting blank energy investment decisions in the personal sector.
The knowledge comes from the Clean Investment Monitor, a new initiative of Rhodium Group, a consultancy; and the Energy and Environmental Policy Research Center at the Massachusetts Institute of Technology. Their findings go beyond estimates, from the White House and elsewhere, and offer the most comprehensive look yet at S effects. Biden on the emerging energy economy in white. in the United States.
Researchers in the first data collection include Trevor Houser, a former Obama administration official and Rhodium’s spouse; and Brian Deese, former director of Mr. Deese’s National Economic Council. Biden, innovation researcher at MIT.
The Inflation Reduction Act, which Biden signed into law in August 2022, includes a wide variety of lucrative incentives to inspire domestic production and fuel the country’s transition to fossil fuels. This includes extensive tax breaks for complex battery production, solar panel installation, purchase of electric vehicles and other initiatives. Many of those tax breaks are unlimited, meaning they could charge taxpayers billions of dollars — or even as much as $1 trillion — if they manage to generate enough new investment.
Biden administration officials have attempted to quantify the effects of this law, as well as the bipartisan infrastructure and semiconductor law signed by the president before his term, counting announcements of new bills similar to the law through corporations. The White House estimates that corporations have so far announced $511 billion in commitments for new spending similar to those laws, adding $240 billion for electric cars and electric power technologies.
Rhodium and M. I. T. se’s research draws on knowledge from federal agencies, industry groups, corporate announcements and securities presentations, news and other resources to attempt to build a real-time estimate of the amount of investments already made in target emissions alleviation technologies through the Physician’s Program. For comparison purposes, his knowledge dates back to 2018, under the presidency of Donald J. Trump.
The figures show that actual (unannounced) investments by companies and customers in electric power technologies reached $213 billion in the second part of 2022 and the first part of 2023, after Biden signed the climate bill. That’s up from $155 billion a year earlier and $81 billion in the first year of data, Trump said.
Data trends suggest that the effect of Biden’s program on electric power investments differs depending on the existing economic scenario of each target technology.
Biden’s biggest successes have been encouraging greater investment in U. S. manufacturing and catalyzing investment in technologies that remain new to the market.
Driven by foreign investment, such as in Georgia’s battery factories, genuine investment in electric power production more than doubled last year from the previous year, according to the data, totaling $39 billion. Such investments were almost non-existent in 2018.
Most of this spending went to the electric vehicle supply chain, adding the new operations center in Southwest California, Nevada and Arizona. The Inflation Reduction Act provides tax breaks for such investments, with local-content needs meant to inspire the production of a must-have vehicle. -They have a gathering of minerals, batteries and cars in the United States.
However, the big winners in terms of production investment, in terms of percentage of the state economy, are the classic auto states: Tennessee, Kentucky, Michigan and South Carolina.
The weather law also appears to have spurred investment in so-called green hydrogen, which splits water atoms to create a commercial fuel. The same goes for carbon management, which aims to capture and store greenhouse fuel emissions from existing power plants or extract them. carbon from the atmosphere. All of those technologies struggled to gain traction in the U. S. They were in the U. S. before the law filled them with tax breaks.
Hydrogen and much of the carbon capture investment is concentrated along the Gulf Coast, a region filled with historic fossil fuel corporations that have begun venturing into those technologies. Another carbon capture investment organization is concentrated in Midwestern states like Illinois and Iowa, where corporations that produce corn ethanol and other biofuels are beginning to sequester their emissions.
The incentives for those technologies in the Inflation Reduction Act, as well as other support in the bipartisan infrastructure bill, “fundamentally replace the economics of those two technologies, making them largely cost-competitive for the first time,” he said. Houser in an interview.
Other incentives have yet to replace the economics of critical technologies, such as wind power, which has boomed in recent years but now faces global setbacks as projects become increasingly expensive to finance.
Investment in wind energy declined in the early part of this year than at any time since the database’s launch.
In the U. S. , wind allocations are struggling to adapt to government processes for permitting, transporting and locating allocations, adding to opposition from some state and local lawmakers. Solar allocations and related investments in solar energy storage, Houser noted, can be built closer to electric power consumers and face fewer hurdles to overcome, with investment in those spaces up to 50% in the second quarter of 2023 from last year.
Some consumer markets have yet to be swayed by the promise of tax breaks for new energy technologies. Americans have not increased their spending on heat pumps, even though the law covers up to $2,000 for the purchase of a new heat pump. Since a year ago, the states that have spent the largest percentage of their economies on heat pumps are concentrated in the Southeast, where, Houser said, customers are more likely to already own such pumps and need a new one.
Jim Tankersley is the White House economic policy correspondent. He has written for more than a decade in Washington about diminishing opportunities for American personnel and is the author of “The Riches of This Land: The True, Untold Story of the American Middle Class. “more about Jim Tankersley
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