Home Business Billions worth of US clean energy tax credits to red, purple states

Billions worth of US clean energy tax credits to red, purple states

by SuperiorInvest

Pensacola, Florida. Cartersville, Georgia. Greensboro, North Carolina. Ridgeville, South Carolina.

Huge clean energy manufacturing plants and thousands of jobs have been announced in these cities — and dozens more across the country — over the past nine months, thanks to the Clean Energy Tax Credits of the Inflation Reduction Act (IRA).

However, some members of Congress have called for the repeal of these federal clean energy tax credits in exchange for raising the United States’ debt ceiling. This threatens this nascent economic boom and threatens hundreds of thousands of new jobs and hundreds of billions in new GDP growth, especially in red and purple states.

Federal policy should not be a political issue, especially when it means a stronger economy and cleaner air. A new energy innovation modeling shows that the states that would reap the greatest economic benefits from the IRA provision are often represented by the most vocal opponents of clean energy tax credits.

Previous modeling showed that statutory clean energy tax credits could increase US GDP by up to $200 billion by 2030 and create up to 1.3 million jobs nationally. This economic upturn is already showing: Clean energy IRA tax credits have already generated nearly $250 billion in project announcement which could create more than 140,000 new jobs.

This first-ever calculation of potential state-by-state GDP growth, new jobs, consumer savings and public health benefits shows that members of Congress fighting to repeal the IRA provision often come from states — led by Texas and Florida — that stand to lose the most.

IRA tax credits spur production, US consumer savings

Energy Innovation used the Energy Policy Simulator to study the effects of IRAs on economic growth, employment and public health in the 48 contiguous states. This analysis focused on clean electricity and clean vehicle tax credits, given their huge impact on jobs and the economy.

Two clear trends are emerging: IRA clean energy tax credits have economic benefits worth hundreds of billions, and those benefits are heavily concentrated in red and purple states. This is not surprising given that these states tend to have more fossil fuel infrastructure or have made less progress on clean energy deployment and emissions reduction policies.

But regardless of how states vote, the IRA provisions clearly crowd out new clean energy development, and building all those new factories and clean energy projects creates new high-paying jobs and tax revenue that boosts regional economies. More than 70 billion dollars were invested in 85 new manufacturing projects since the signing of the IRA, it has created almost 57,000 jobs.

Clean energy is also cheaper than fossil fuels, saving consumers big bucks. More than 96,000 megawatts of new clean energy projects have been announced since the signing of the IRA, enough to power about 72 million homes. It will also generate all that clean electricity $4.4 billion in savings for 24 million utility customers. Consumer savings often equate to new spending that finances further economic activity.

All of these investments nearly cover the Congressional Budget Office’s estimate of $369 billion in IRA reserve costs, but do not include indirect economic activity such as higher wages for workers, reduced fuel costs for customers, and induced spending by both.

This larger economic impact is often lost when discussing what the government would invest in tax breaks. These tax breaks are a generational investment in good-paying jobs, domestic manufacturing and public health. IRA provisions also enhance energy security, attract private investment, reduce consumer costs and restore global economic competitiveness.

Bottom line, IRA financing is fundamentally reshaping America’s energy sector for the better.

Investing in clean energy helps prevent billions in climate change costs

While the positive economic impacts of investing in clean energy are huge, the costs of inaction are exponentially higher. Continuing to burn fossil fuels will spew more planet-warming greenhouse gas emissions into our atmosphere, accelerating extreme weather it cost our country $165 billion in 2022in many of the same states that would benefit most from the introduction of clean energy.

Texas, which would reap the greatest economic rewards from the IRA provision 100,000 new jobs and $15 billion in new GDP by 2030, also face some of the harshest impacts of climate change in the country. State ranks second in the US in terms of wildfire riskhas already warmed to 2.2 degrees Fahrenheitand 62% of its districts were in “extreme drought” last year.

Florida, which has the second highest projected economic gain from Clean Energy IRA Tax Credits 85,000 new jobs and $10 billion in new GDP by 2030, also face serious impacts of climate change. Two billion-dollar hurricanes hit the state in 2022, and Florida is experiencing some of the worst sea-level rise in the U.S. — up to eight inches higher since 1950, with another inch projected to rise every three years. Tidal flooding it has grown by 352% since 2000.which threatens 120,000 properties across the state and requires $4 billion in flood control.

Climate risks aren’t limited to these states – The White House Office of Management and Budget predicts that unmitigated climate change could cost US economy 2 trillion dollars a year by the end of the century. OMB also notes that climate-related financial risks, including disaster relief, flood and crop insurance, and wildfire spending, could cost the federal government up to $128 billion annually by 2100.

Investing in clean energy protects every part of our country by helping prevent the worst impacts of climate change, regardless of which party represents the state.

Keep IRA Clean Energy Tax Credits for a Stronger Economy and Cleaner Air

Debt ceiling negotiations may be at a political impasse, but Americans support raising the U.S. debt ceiling and preserving federal clean energy IRA tax credits.

64% of registered voters say so defaulting on the national debt would have disastrous consequencesand 67% of the same voters support the provision of the IRA. A separate poll found 60% of voters think so Congress should take more action to address climate changeand 74% of the same voters say they would be upset if Congress repealed the IRA provision.

Members of Congress face a tough choice as they negotiate to raise the debt ceiling: Keep IRA tax credits for clean energy and build a stronger economy with domestic manufacturing, new high-paying jobs, lower utility bills and cleaner air. Or reversing the course of the largest domestic economic investment in decades, chaining our communities to higher fossil fuel prices and the ever-worsening effects of climate change.

Choosing the latter would hurt ordinary Americans the most, worsen inflation and essentially impose a new tax on American households. Why not tap into the nascent clean energy economic boom that is sprouting up in every corner of our country?

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