According to the Sustainable Energy in America 2024 Factbook from The Business Council for Sustainable Energy, more than $303 billion in energy financing was deployed in 2023. The spending followed the passage of the Inflation Reduction Act (IRA) in August 2022.
US investment ranks second globally behind China, which has spent $676 billion.
“This is a demand-driven energy transformation accelerated by the public policies that have been adopted,” Jeannie Salo, vice president for government relations at Schneider Electric, said on a call with reporters.
Tax credits and declining emissions
The Biden administration has pledged to cut emissions by 50 to 52 percent below 2005 levels by 2030. BloombergNEF's analysis shows that emissions in 2023 were 16 percent below 2005 levels. The effectiveness of the U.S. decarbonization strategy is strongly tied to the IRA's tax benefits, the report said.
These credits led to the announcement of an additional $131.4 billion in clean technology investments, in addition to the $303.3 billion previously committed, across 28 states, Canada and Mexico.
“Tax credits help renewables overcome economic barriers,” Tom Rowlands-Rees, head of North American research at BloombergNEF, said on the same call. “If market factors work against renewable energy sources, [tax incentives] can help soften that blow.”
The report also shows how individual states benefit from the IRA and the Bipartisan Infrastructure Law (BIL). Georgia tops the list with $16.9 billion in investments announced post-IRA, followed by North Carolina with $15.4 billion.
“Billions of dollars are flowing into communities across the country… that haven't necessarily seen the investments [before]” said John Hensley, vice president of markets and policy analysis at the American Clean Power Association. Those investments lead to new jobs, Hensley said. “Eighty percent of the [projects and manufacturing facilities] are located in congressional districts held by a Republican representative.”
IRA credits, including 45U, a tax credit for electricity generated by a nuclear power plant, and the revised 45Q carbon capture credit, which grants rebates of as much as $180 per ton of carbon captured, are still awaiting final guidance from the IRS, which is expected to expected to be delivered sometime this year. But if 2023 and the $300 billion in investments are any indication, there is a huge market opportunity for clean technology investments in 2024.
This article first appeared on GreenBiz.com.
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