On a recent day in the July sun, three men set up solar panels on the roof of a spacious two-story home near the banks of the Kentucky River, just a few miles from the state capitol where lawmakers have promoted coal for more than a century.
The US Climate Act passed a year ago offers a 30% discount on that installation through a tax credit, and that helps drive clean energy even in places where coal still provides cheap electricity. For Heather Paget’s family in Frankfurt, it was a good deal.
“For us, there are no political motives,” Paget said. “It really came out financially, it made sense.”
On August 16th, after the warmest June ever recorded and the hottest month of July, America’s long-awaited response to climate change, the Inflation Cut Act, turns one year old. In less than a year, it prompted an investment in building a massive battery and electric vehicle manufacturing facility across the states. Nearly 80 major clean energy manufacturing facilities have been announced, an investment equivalent to the previous seven years combined, according to the American Clean Energy Association.
“It seems like every week a new factory facility is announced somewhere,” said Jesse Jenkins, a Princeton University professor and REPEAT project leader who has been deeply involved in analyzing the law.
“We’ve been talking about bringing manufacturing jobs back to America my whole life. We’re finally doing it, right? This is very exciting,” he said.
The IRA considers America’s most important response to climate change, after decades of pressure by stalled oil, gas and coal interests, while carbon emissions have soared, creating a hotter and more dangerous world. It is designed to spur clean energy construction on a scale that will bend the greenhouse gas emissions bracket in the United States. It also aims to build local supply chains to reverse the early dominance of China and other countries over this vital sector.
One of the goals of the law is cleaner transportation, which is the largest source of climate pollution in the United States. Siemens, one of the world’s largest technology companies, produces charging stations for electric cars. Executives say this alignment with US climate policy is driving up demand for batteries.
“When the federal government makes an investment, we get to the tipping point faster,” said Barbara Hampton, CEO of Siemens USA, adding that the company has invested $260 million in battery or battery storage projects in recent years.
The law also encourages more types of batteries that feed electricity to the grid when the wind is weak, or at night when the sun isn’t hitting the solar panels. It could put the storage business on the same upward trajectory that solar caught on a decade ago, said Michael McGowan, president of North American infrastructure private markets for Mercer Alternatives, a consulting firm.
Derek Flacolle, North America policy associate at Bloomberg NEF, noted that sales at the largest U.S. solar panel manufacturer, First Solar, surged after the law was passed, leading to a large order backlog.
“These are years and years of manufacturing capacity already booked because people are optimistic about the market for solar energy produced in the United States,” he said.
Expensive, but promising technologies for decarbonization in the near term are also aided by the IRA.
Jason Mortimer is the senior vice president of global sales at EH2, which makes large, low-cost electroanalyzers — machines that separate hydrogen from water. Hydrogen as a clean energy is still in its infancy. “The IRA accelerates large-scale hydrogen implementation by about four to five years,” he said, making the US competitive with Europe.
But experts say these changes, while important, may be just the beginning.
“I think we’re about to see a significant flood of manufacturing investment related to wind and solar power in the United States,” Jenkins said, adding that 2026-2028 is when the country will see the full impact of the law.
Other countries, some of which are ahead of the United States in addressing climate change, have done more of their own to accelerate the transition to clean energy. Canada has announced a matching policy and Europe has its own measures to attract manufacturing, similar to the IRA.
“European and Japanese automakers are trying to think about how they can change supply chains in order to try and compete,” said Neil Mehrotra, associate vice president and policy advisor at the Federal Reserve Bank of Minneapolis and contributor to a report on US law published by the Brookings Institution.
The Congressional Budget Office initially estimated that the IRA’s tax breaks would cost about $270 billion over a decade, but Brookings says businesses could benefit from the credits more aggressively and the federal government could pay three or four times more.
The law is supposed to reduce emissions of the United States — the country historically most responsible for greenhouse gases — by up to 41% by 2030, according to a new analysis by Princeton researchers. This is not enough to achieve US goals, but it is a significant improvement.
But those crucial reductions in greenhouse gases are in part at risk if America’s electric grid cannot grow enough to connect new wind and solar farms and handle new demands, such as mass vehicle charging.
Despite the new investment in the red states, not everyone likes it. Republicans recently proposed repealing key elements of the law. He wouldn’t consider it, said Frankfort resident Jesse Decker, whose neighbor has solar panels, and doesn’t think the federal government should “waste money” on questionable climate programs.
Nor does the law mean that oil and gas, which warm the climate, will disappear.
“Frankly, we’re going to be using fossil fuels for many decades to come,” said Fred Eames, a regulatory attorney at law firm Henton Andrews Court.
On Paget’s rooftop, Nicholas Hartnett, owner of Pure Power Solar, is pleased that business is taking off and that homeowners are opening up to solar once they see how they can benefit financially.
“You have the environmental side, which deals with the left, and then you have the option of using your tax money that the government would otherwise have taken, which gets the right choice,” he said.
