In 2023, emissions witnessed a significant drop, plunging 16 per cent below the levels recorded in 2005, as reported by Bloomberg. The Sustainable Energy in America 2024 Factbook, compiled by The Business Council for Sustainable Energy, highlights an impressive figure of over $303 billion deployed in energy financing during the same year. This surge in spending closely followed the enactment of the Inflation Reduction Act (IRA) in August 2022.
The United States is the second-largest investor globally, trailing only China, which allocated a staggering $676 billion towards similar endeavours.
"This is a demand-driven energy transformation accelerated by the public policies that have been adopted," said Jeannie Salo, vice president for government relations at Schneider Electric, on a call with reporters.
The Biden administration's ambitious agenda aims to slash emissions by 50 to 52 per cent compared to 2005 levels by 2030. BloombergNEF's insightful analysis underscores that emissions in 2023 dipped by 16 per cent compared to 2005. The efficacy of the United States decarbonization strategy hinges significantly on the tax credits introduced by the IRA, according to the report.
These tax incentives catalyzed an additional $131.4 billion in investments in clean tech, supplementing the initial $303.3 billion distributed across 28 states, Canada, and Mexico.
"Tax credits help renewables overcome economic barriers," said Tom Rowlands-Rees, head of North American research at BloombergNEF, on the same call. "When market factors work against renewables, [tax incentives] can help cushion that blow."
The report further dissects how individual states reap the benefits of the IRA and the Bipartisan Infrastructure Law (BIL). Notably, Georgia leads with $16.9 billion in investments announced post-IRA, followed closely by North Carolina with $15.4 billion.
"Billions of dollars are flowing into communities across the country... which 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, said Hensley. "Eighty per cent of [projects and manufacturing facilities] are located in congressional districts held by a Republican representative."
The IRA credits, including 45U, a tax credit for electricity generated by a nuclear power facility, and the revised 45Q carbon capture credit, which offers rebates up to $180 per ton of carbon captured, await final guidance from the IRS, expected later this year. However, if the trends in 2023 and the substantial $300 billion investments indicate, 2024 presents a colossal market opportunity for clean-tech investments.