Early last year, I thought the increase in wind and solar power prices was a blip. After all, one of the constants in my decade-plus covering energy was that wind and solar prices were in a near-perpetual state of decline.
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Investments in battery factories, solar panel manufacturing and mining will help the Biden administration meet targets for reducing greenhouse gases.
On August 12, 2022, Congress passed the Inflation Reduction Act of 2022 (“Act” or “IRA”), a $400 billion legislative package containing significant tax and other governmental incentives for the energy industry, in particular the renewable energy industry. The bill will have an immediate impact on the wind and solar industries, along with other clean energy projects and businesses.
The $369 billion in climate and energy funding in the Inflation Reduction Act isn’t just the biggest-ever U.S. investment in combatting climate change. It also promises to deliver for the first time a comprehensive U.S. clean energy industrial policy — a plan to transform the country from a laggard to a leader in making the technologies vital to combating climate change.
The U.S. Senate and House of Representatives have passed the Inflation Reduction Act of 2022 (the Act), which climate analysts have hailed as game-changing for the growth of solar power, and solar manufacturing, in the United States. The Act has numerous key provisions aimed at combating climate change, including several changes to the tax laws that will significantly impact the U.S. solar manufacturing industry.
This past Sunday, the United States Senate passed the Inflation Reduction Act, and today the House of Representatives votes on the bill. It is now on its way to the President’s desk for a final signature as soon as next week.
Now that the Democrats’ major climate and tax bill has been passed, the United States might actually end up with an effective industrial policy for the clean energy and electrification sectors.
The Inflation Reduction Act is a clean-power policy behemoth that will lower energy prices, benefit consumers with more clean energy choices, and provide a path to cut U.S. carbon emissions 40 percent below 2005 levels by 2030. It includes $369 billion in support for clean energy and a stable climate, including provisions to promote EVs, heat pumps, energy storage, nuclear power, environmental justice and more.
In September 2021, congressional Democrats introduced the Build Back Better Act (BBBA) in the House of Representatives with ambitious goals related to climate change and social policy. All 50 Senate Democrats needed to back the BBBA for it to pass Congress and then go to the president. During negotiations Sen. Joe Manchin (D-WV) pulled his support, effectively ending the legislation.
If signed into law as written, the climate bill before the US Congress would change the calculus for American households thinking about going solar. The legislation stands to make that transition more affordable while also subsidizing purchases of electric cars, heat pumps, high-tech water heaters and battery-storage systems — clean-energy upgrades that will spur more household demand for electricity. There are so many incentives to install solar that the Inflation Reduction Act of 2022 might be more aptly titled the “Electrify Your Life Act.”
We are less than a week away from the much-anticipated release of the Consumer Price Index, the key measure of US inflation, for July. As of June, US personal spending on energy goods and services (gasoline, electricity and natural gas) was running at an annual rate of $860 billion . That is a record in nominal dollar terms: US consumers have never spent more on energy. Even adjusted for inflation, US personal spending on energy was at an all-time high in June, having passed its previous March 2008 high in March 2022.