Tag: Biden

“The 2022 Inflation Reduction Act stands as the single largest piece of legislation to address climate change in United States history.
The IRA contains nearly $370 billion for programs like tax credits for more efficient appliances, building new battery plants, and subsidies for renewable energy. And it triggered a boom in new construction and manufacturing for things like solar panels. It also created hundreds of thousands of new jobs.

But two years later, much of that money remains unspent.

The largest investment — ever — for the clean energy transition has yet to materialize into actual hardware like heat pumps or wind turbines. Despite more than $7.5 billion allocated to building electric vehicle chargers, for example, only a handful have been built. About 40 percent of big IRA projects hit delays, according to the Financial Times.”

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“Now President-elect Donald Trump has said he wants to claw back the unspent money and congressional Democrats are getting antsy. In a recent letter, dozens of senators and representatives wrote to the White House asking Biden to get more money out the door, from the IRA as well as other legislation like the Bipartisan Infrastructure Law.”

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“One of the big challenges with spending most federal funds in programs like the IRA is that the money doesn’t go straight to suppliers for construction materials, EV chargers, batteries, or home insulation. Rather, the funds are sent to state and local authorities who then distribute the money.

That added step creates a lot of complications. First, a lot of local officials simply are not set up to receive a lot of cash all at once. It requires rigorous accounting and record-keeping, so before they can use the money, recipients have to invest in the personnel and tools to track it. Then when money hits bank accounts, local officials have to decide where to spend it. That means seeking out proposals, soliciting competitive bids, and giving enough time for communities to weigh in. Even for “shovel-ready” projects, they often have to contend with last-minute hurdles like rising financing costs from inflation, supply chain snarls, and litigation that can halt ground-breaking.

Local governments also have their own incentives. While Biden’s White House wanted to juice the clean energy economy as fast as possible, often state and local governments want to stretch out the funds. “There’s always a sense that if money is spent too quickly, people might get used to the money, maybe even addicted to it, and then officials would have to raise taxes to make up the difference” when it runs out, said Donald Kettl, professor emeritus at the University of Maryland School of Public Policy who studies government spending.

Delays also result from how the funding is leveraged, whether it’s a grant, a loan, a loan guarantee, or a tax credit. Tax credits add an inherent lag because you don’t receive the cash benefit until you file your taxes.”

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“There are also factors beyond Biden’s direct control at play. Changes in global demand and uncertainty about the outcome of the presidential election led some companies to hold off on executing IRA-funded projects. And those that do want to get rolling often have to go through a tedious, sometimes years-long permitting process before they can break ground.”

https://www.vox.com/climate/391681/inflation-reduction-act-biden-ev-credit-trump-musk