The Inflation Reduction Act has spurred hundreds of billions of dollars in U.S. clean energy investment. That progress could be torn asunder by a repeal of the climate law, clearing the way for China’s dominion over the clean energy market.
On the campaign trail, President-elect Donald Trump broadcast his intent to “terminate” the Biden administration’s signature climate law, the Inflation Reduction Act (IRA), calling it “the greatest scam in history.”
That “scam” has funneled hundreds of billions of dollars into Republican districts, dimming GOP lawmakers’ interest in scrapping the climate law. Nonetheless, they have signaled continued interest in at least revamping the IRA in a Republican-controlled Congress. Billions of dollars for American factories are at stake.
A new Net Zero Industrial Policy Lab study finds that scrapping the IRA would mean that the United States cedes billions of dollars in potential clean energy investment to China and other U.S. competitors.
“Our scenario analysis shows that US repeal of the IRA would, in the most likely scenario, harm US manufacturing and trade and create up to $80 billion in investment opportunities for other countries, including major US competitors like China,” the study authors write. “US harm would come in the form of lost factories, lost jobs, lost tax revenue, and up to $50 billion in lost exports.”
Coupled with the Bipartisan Infrastructure Law, the IRA already has spurred more than $200 billion in U.S. clean energy investments. That development has been hard won amid enormous Chinese industrial overcapacity in clean energy products.
The Net Zero Industrial Policy Lab warns that “an IRA repeal would hamper the US bid for clean technology leadership and cede the space to others. A repeal of the IRA would not halt the energy transition in either the US or the world. But it would mean that the US is unlikely to have a strong position in the global value chains of the future energy economy, hastening its economic and geopolitical decline.”
Despite past Republican ire surrounding the IRA, GOP lawmakers have seen hundreds of billions of dollars invested in clean energy projects in their districts thanks to the climate law’s tax subsidies. Indeed, three quarters of clean energy investments are in Republican districts.
From CNN:
“Close to 80% of the $243 billion-worth of projects that are either completed or under construction are in GOP districts. The same goes for another $435 billion in clean energy projects companies have announced but have not yet built, according to an exclusive CNN analysis of data from the nonpartisan Rhodium Group and the Massachusetts Institute of Technology.”
This isn’t merely a partisan battle. There are plenty of IRA defenders beyond the Democratic party who have responded to Trump’s threat to repeal the climate law with strong calls to preserve it.
“One of our big priorities as an industry is going to be to articulate the benefits of the IRA. Most of those (IRA) benefits don’t actually accrue to our shareholders. They go straight to our builds and down to our customers,” Pedro Pizarro, the CEO of utility company Edison International, told Reuters on Saturday. And, the Zero Emission Transportation Associated, which represents Rivian, LG, Tesla, Uber, Lucid, and Panasonic, urged the Trump adminisration this past Friday to sustain tax credits for electric vehicles within the IRA.
As Alliance for American Manufacturing President Scott Paul said on the one-year anniversary of the IRA’s passage:
“China has a stranglehold on some of the world’s most essential rare earth minerals and is dead set on subverting America’s burgeoning solar and electric vehicle industries. The IRA and other efforts to bolster American manufacturing are more important than ever to counter these aims. The United States has been playing catch up, but the IRA has brought transformative change that must be sustained.”
America cannot afford to abandon our clean energy manufacturing investments in repealing or undermining the IRA. The climate law plays a critical role in our economic success, clean energy goals, and geopolitical strength.