Image credit: Climate Power

Red States Lap Up IRA Dollars From The Government They Despise

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Reactionaries love to lambaste the US government for doing everything they hate — supporting unions, lowering the budget deficit, and promoting social policies that benefit all Americans instead of just a favored few. How dare those evil woke bastards create a government that works for everyone? It’s unAmerican!

Take the IRA, for example. Those accursed Democrats came up with a plan to reinvigorate the US economy and make America ready, willing, and able to lead the clean tech revolution, a plan that not one single Repugnican voted for. No God fearing, right thinking, true blue patriot GOP member of Congress could stomach the idea of actually making America the greatest economic power on the face of the Earth once again, so they stood on the sidelines and hurled epithets and invective at those who dared take the lead.

But now the IRA is in force and, wonder of wonders, Republicans love it! Georgia has enjoyed a staggering amount of clean tech investment since the bill passed. Hyundai is building three new battery factories there and a new facility to manufacture electric cars. Freyr and SK are building or expanding battery manufacturing plants in Georgia, and QCells has recently announced it will construct a new factory to manufacture solar panels in the Peach State.

“It seems like all roads are currently leading to Georgia, it’s really benefiting disproportionately from the Inflation Reduction Act right now,” Aaron Brickman, a senior analyst at RMI, tells The Guardian. He added that the $370 billion in clean energy incentives and tax credits in the bill are a “complete game changer. We’ve just frankly never had that before in this country. The IRA has transformed the landscape in a staggering way.”

So-called red states, where hatred of “the other” is rampant, will be the biggest beneficiaries of the tax credits and incentives baked into the IRA. 80% of all utility-scale wind or solar farms and battery projects currently in advanced development are located in those states, according to an analysis by American Clean Power. $131 billion in IRA benefits could flow to Texas before the end of this decade, according to RMI.

That’s despite Texas being led by knee-jerk reactionaries like US representative Ronny Jackson, who tweeted last month, “I’ll NEVER give up my gas stove. If the maniacs in the White House come for my stove, they can pry it from my cold dead hands. COME AND TAKE IT!!” The people of Texas must be very proud of Jackson. They keep electing him. Florida, led by a governor who is trying hard to be more despicable than Donald Trump, may be the recipient of $62 billion in IRA benefits  and Georgia $16 billion, according to RMI.

The irony that all this money from the IRA flowing to red states is not lost on President Biden, who said in his State of the Union speech last month, “My Republican friends who voted against it — I still get asked to fund the projects in those districts as well. But don’t worry, I promised I’d be a president for all Americans. We’ll fund these projects and I’ll see you at the groundbreaking.”

The IRA Has International Consequences

“Clean energy companies have announced 101,036 new jobs in 31 states between August 16, 2022 to January 31, 2023. As of January 31, 2023, there are over 90 new clean energy projects in small towns and bigger cities nationwide totaling $89.5 billion in new investments,” Climate Power, a clean tech advocacy group announced recently. That pull of all those incentives is having an impact on other nations as well.

Tesla and Northvolt have both altered their battery factory plans to take advantage of them. Reuters reports that some of the battery manufacturing that was slated to take place at the new  Tesla factory in Germany will now be done at the Gigafactory in Austin, Texas, it says.

While officials in Germany say no jobs will be lost, they don’t mention whether the move may reduce the number of new jobs the factory in Grünheide is expected to create. “The focus of Tesla’s cell production is currently in the United States due to the framework created by the United States Inflation Reduction Act (IRA),” Tesla said in a written statement seen by Reuters.

Northvolt, the Swedish battery manufacturing company founded by a former Tesla battery engineer Peter Carlson, also is turning its attention to the United States. Carlson announced this week his company will outline details of a new manufacturing plant in the US before the start of this summer, according to CNBC. Northvolt said last October it might prioritize expansion in the US over Europe, even though in May it said it was planning to construct a new battery factory in Germany.

“We have also been working on a North American plant and, with [the] IRA, that plan kind of got turbo-boosted given the very strong incentives,” Carlsson said. What is attractive about the IRA is its simplicity of the plan, he added. If American consumers wants to buy a new electric vehicle, they benefit from a tax credit if they opt for a model where 40% of the critical mineral and battery components are made in the US — or a country with a US free-trade agreement. That tax credit will lower the sales prices of cars that qualify for the credits.

Carlson insisted that Northvolt has not abandoned its plan for a German factory. “We have also been clear that in order to put the real large amount of investments into the facilities and the equipment, we need to find a solution with different stakeholders, including the German government on, number one, how we can actually utilize that surplus [of] energy to an affordable and competitive long term cost and, secondly, how we make sure that the total investment is done in an effective way.”

The German factory was expected to start producing its first batteries in late 2025 and create 3,000 jobs. The question therefore is not if, but rather when, the Swedish firm will make this investment in Germany. When asked which of the two locations, North America or Germany, would be ready first, Carlsson declined to answer, CNBC says.

Europe Is Worried About The IRA

Europeans are rightly concerned the IRA will drain clean tech investments from The Continent. While everyone wants to slow the Chinese clean tech juggernaut, especially when it comes to manufacturing batteries and electric cars, European leaders worry that the US will simply supplant China as the top dog in clean tech, leaving Europe in the same position of being subservient to the economic interests of a foreign power.

The European Commission has proposed loosening rules on state aid for investments in renewable energy, decarbonizing industry, hydrogen, and zero emission vehicles, though Germany’s finance minister has warned Europe must not respond to the US act with excessive subsidies.

The Takeaway

It’s a delicate balancing act, but it clearly illustrates one thing. The world dances to the tune money calls. We can argue till the cows come home about the merits of capitalism, but it is beyond arguing that because fossil fuel companies pay nothing for the environmental harm they do — in fact they are rewarded with trillions of dollars worth of state and local incentives — they enjoy an unfair economic advantage, one that puts the survival of humanity at risk.

For those who worship at the altar of capitalism, we have this simple suggestion. Make fossil fuel companies pay for the harm they cause and then step back and get out of the way. The changes wrought by the IRA will soon pale in comparison as the world rushes to embrace clean energy and an economy that no longer relies on extracting, transporting, refining, and burning fossil fuels.

Forget about all the stupid culture war idiocy. Level the playing field by making coal, oil, and methane companies pay all their costs of doing business. Is that too much to ask?

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Steve Hanley

Steve writes about the interface between technology and sustainability from his home in Florida or anywhere else The Force may lead him. He is proud to be "woke" and doesn't really give a damn why the glass broke. He believes passionately in what Socrates said 3000 years ago: "The secret to change is to focus all of your energy not on fighting the old but on building the new." You can follow him on Substack and LinkedIn but not on Fakebook or any social media platforms controlled by narcissistic yahoos.

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