The Inflation Reduction Act shifted the calculus on wind, solar and EV manufacturing in the U.S. Domestic and foreign firms alike are now rushing to set up shop.
The U.S. clean energy revolution must be (mostly) Made in America.
At least, that’s what the text of the country’s record-shattering climate law says. Indeed, much of the $391 billion (or more) in climatetech funding in the Inflation Reduction Act can be disbursed only when the product in question — be it an electric vehicle, a sprawling solar array or the whirring blade of a wind turbine — is made at least partially in the U.S. The legislation is literally paying companies to manufacture their products domestically, all in service of making the country more self-sufficient regarding clean energy.
This policy has rapidly shifted the economic viability of building clean energy equipment in the U.S., attracting tens of billions of dollars in private investment from both domestic and foreign firms hoping to capitalize on the clean energy boom.
“What has taken place as a result of and since the Inflation Reduction Act can simply not be overstated,” said Aaron Brickman, senior principal in the U.S. program of clean energy think tank RMI. “The United States is effectively now the most attractive destination for global capital in clean energy and cleantech.” (Canary Media is an independent affiliate of RMI.)
Nearly 100 new clean energy manufacturing facilities or factory expansions were announced in the U.S. between last August when President Biden signed the law and the end of May, totaling more than $70 billion in new investment, according to Canary Media analysis. And more are being announced every week.
Companies have so far gravitated toward a handful of states to build their production facilities. Much of this activity is concentrated east of the Mississippi, in a geographic stretch spanning from the Great Lakes to Georgia that has been dubbed the “Battery Belt.” While Michigan’s historic grip on the auto industry is still reflected in the battery and EV production plans announced so far, the South has become a bustling hub for the industry as well.
Solar manufacturing is headed for the South, too. Planned factories are concentrated in Alabama, Georgia and South Carolina, with some also coming to Ohio and solar giant Texas.
Another 11 clean energy manufacturing projects that account for more than $7.5 billion in investment have been announced but don’t have a location yet, so those are not shown in the map above.
According to RMI’s Brickman, some of the leading states have courted clean-energy manufacturing investment with an array of tactics, such as providing state-level tax incentives, ensuring the availability of shovel-ready sites, training workers and investing in infrastructure.
South Carolina, for example, advertises itself as an EV industry destination, in part because of the 75,000 people already employed in the automotive industry in the state. And in Georgia — the state currently on track to get the most investment in clean energy manufacturing — officials have touted low taxes, good universities, workforce development and, to the dismay of labor groups like the United Auto Workers, low unionization rates.
The geographic proximity of these facilities will likely yield other benefits, such as cheaper transportation from manufacturing sites to assembly plants. Production clusters in the Battery Belt and the South are also likely to benefit from a growing trained workforce and emerging educational programs intended to meet the hiring demand.
At least so far, most of the manufacturing investments look likely to go to communities represented by Republican lawmakers in Congress, all of whom voted against the Inflation Reduction Act.
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