In a week of dire market news, there’s one bright spot for climate. According to new data out today, clean technologies played a significant role in boosting investment in the U.S. economy in recent years — accounting for around 4.5% of total private investment since the Inflation Reduction Act was enacted.
That’s more than half of total private investment growth during that time period, according to the latest report from the Clean Investment Monitor, a joint project of Rhodium Group and MIT’s Center for Energy and Environmental Policy Research. The report assesses clean investment trends — specifically investment in technologies eligible for tax incentives under the IRA — between July 2022, and June 2024.
Doubling down on battery making
The second quarter of 2024 saw a doubling down on manufacturing investments, to the tune of $89 billion. Over $1 in every $4 of cleantech investment went to manufacturing in those months, up from $1 in every $10 in the third quarter of 2022. The bulk of those dollars have gone toward the electric vehicle supply chain, the report said.
Manufacturing represents around 18% of total cleantech investments in the post-IRA years, compared to the 8% of cleantech investments it accounted for before the IRA. In both periods however, battery manufacturing received the largest share of that investment: 43% pre-IRA and 65% post-IRA.
Of the $161 billion invested into deployment of cleantech, utility-scale solar and storage dominated, receiving a combined $108 billion. Grid-scale storage alone notched $37 billion, and utility-scale solar $71 billion.
According to the report’s authors, though, the most dramatic deployment story is that of emerging technologies. Investments in sustainable aviation fuels rose an eye-popping 1,655% in the post-IRA period, up to $14 billion. Carbon management technologies, meanwhile, increased more than sixfold to $8 billion.
Certain states took home more of the manufacturing investments than others. In Kentucky, Michigan, Nevada, and Tennessee, for instance, those investments accounted for around 1% of each state’s total GDP.
That’s a very different geographic spread than that of investment in clean energy generation, which is dominated by rural western states like Montanta, New Mexico, and South Dakota. In Wyoming, for instance, clean energy investment accounts for 2.1% of the state’s GDP.
Looking ahead
CIM estimates that the federal government itself has invested $78.4 billion in cleantech, primarily in the form of tax credits, but also via grants, loans, and loan guarantees.
Today’s report follows research from Rhodium Group in July that outlined multiple paths forward for U.S. emissions, based on whether the IRA is trimmed or repealed after President Joe Biden leaves office.
According to that report, the combination of state and federal policies that exist today will bring U.S. emissions down by between 32% and 43% by 2030, compared to 2005 levels. That represents at least a doubling, if not a quadrupling, of the pace of emissions abatement from 2005 to 2023, the authors noted.
But as the presidential race picks up steam — with both parties now armed with VP picks as of yesterday — the fate of the IRA in November remains uncertain. A Republican-controlled White House would likely seek to roll back many Biden-era clean energy regulations. (Former President Trump has said he would reverse the IRA “on day one.”) And a unified House and Senate under Republicans are likely to attempt similar rollbacks.
But a Harris presidency would likely see a strengthening of energy and climate policies and regulations, potentially accelerating the pace of emissions reductions even further.
