Just two years after the Inflation Reduction Act (IRA) was enacted, the Biden administration has seen $89 billion in investments in domestic clean energy manufacturing. These investments are notably concentrated in less urbanized regions of the Midwest and South, areas that traditionally lean Republican.
According to CNBC, industrial and consumer investments since the IRA’s implementation in August 2022, through the first half of this year, totaled $493 billion. This represents a 71% increase compared to the investment levels seen two years before the IRA.
The findings come from the “Clean Investment Monitor: Tallying the Two-Year Impact of the Inflation Reduction Act ” report, published by the Rhodium Group and MIT’s Center for Energy and Environmental Policy Research (CEEPR). The report highlights that manufacturing investments in clean energy and electric vehicles surged to $89 billion in the two years following the IRA’s implementation, a dramatic 304.55% increase compared to the $22 billion invested in the two years before the IRA.
Trevor Houser, a partner at the Rhodium Group, noted, “The IRA is having an innovative impact on the manufacturing sector.” He added, “The scale of new manufacturing activities we are witnessing is unprecedented in recent U.S. history, primarily driven by new clean energy manufacturing facilities.”
When looking at clean investment levels across all 50 states post-IRA, California leads with $94 billion, followed by Texas with $69 billion, Florida with $29 billion, Georgia with $22 billion, and Arizona with $18 billion.
In terms of clean investment relative to state Gross Domestic Product (GDP), Nevada (2.4%), Wyoming (2.2%), Arizona (1.8%), Tennessee (1.6%), Montana (1.5%), New Mexico (1.4%), and Kentucky (1.4%) have the highest percentages.
Houser explained, “While investments in AI, tech, and finance tend to be concentrated in urban areas, clean energy investments are focused on non-urban regions, providing crucial new investments to these areas.”
However, concerns have emerged that IRA policies might be reversed if former President Donald Trump wins the upcoming election. At a rally in Pennsylvania on August 19, Trump criticized the IRA’s maximum $7,500 tax credit for electric vehicles as “ridiculous.”
CNBC observed that the future of IRA-related investments may depend on the election results, noting that the potential for a Republican victory is shaking investors’ confidence. There are fears that the IRA could be weakened or, in a worst-case scenario, repealed.
