119 Trillion Investment Over 2 Years
Concerns Over IRA Rollback if Trump Wins
As the Inflation Reduction Act (IRA), a key policy of the Joe Biden administration, marks its second anniversary, it has been revealed that investments in clean energy have increased approximately fourfold. CNBC reported that the IRA has particularly benefited the southern regions, which are predominantly Republican strongholds.
According to the Massachusetts Institute of Technology (MIT) and the Rhodium Group on the 20th (local time), since the signing of the IRA in August 2022, investments in clean energy and electric vehicle-related manufacturing have surged to $89 billion (about 119 trillion KRW). This is about four times the investment amount from two years ago ($22 billion).
Trevor Houser, a partner at the Rhodium Group, stated, "The IRA is having a transformative effect on the manufacturing sector," adding, "The volume of new manufacturing activity we are currently seeing is unprecedented in recent history, primarily due to new clean energy manufacturing facilities."
Since the passage of the IRA, approximately 271 manufacturing projects related to clean energy technologies and electric vehicles have been announced. According to the nonprofit environmental organization E2, if all 271 projects are completed, more than 100,000 jobs will be created.
Partner Houser mentioned that IRA investments have been particularly beneficial to rural communities. He said, "Unlike investments concentrated in AI, technology, and finance sectors in large cities, clean energy investments are focused on rural areas and serve as a source for attracting new investments in those regions."
A significant portion of the IRA benefits has gone to Republican-leaning states. According to E2, about 85% of IRA investments from new projects have been concentrated in Republican states. This is also causing shifts in the political dynamics of the United States.
Some speculate that if former President Donald Trump, the Republican presidential candidate, is elected, the IRA could be rolled back. In an interview with major foreign media outlets the previous day, Trump mentioned considering ending the up to $7,500 (about 9.99 million KRW) electric vehicle tax credit under the IRA. He also holds a skeptical stance on clean energy and is promoting the expansion of fossil fuels.
However, executives of renewable energy companies and analysts believe that even if the Republicans win the U.S. presidential election, tax credits related to clean energy investment, production, and manufacturing could be maintained.
John Ketchum, CEO of NextEra Energy, the largest green utility company in the U.S., said during a conference call after last month's earnings announcement, "The number of Republican lawmakers accepting clean energy credits within the IRA is increasing," adding, "They are witnessing the positive impacts on their states and communities, making it difficult to reject."
In fact, earlier this month, 18 Republican lawmakers expressed opposition to the repeal of IRA energy tax credits to House Speaker Mike Johnson. They warned, "Early termination of energy tax credits used for investments already underway would hinder private investment and halt ongoing developments," and cautioned, "A complete repeal would create the worst-case scenario of wasting billions of dollars in taxes without achieving any results."
CNBC stated, "The future of such investments depends on the outcome of the U.S. presidential election. The possibility of a Republican victory has shaken the confidence of some investors who fear that the IRA could be weakened or, in the worst case, repealed."
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