We’ve heard this for well over a decade, if not two. And all it takes is a massive amount of government funding, because the private sector won’t really commit their own money to that extent
The Climate Economy Is About to Explode
Late last month, analysts at the investment bank Credit Suisse published a research note about America’s new climate law that went nearly unnoticed. The Inflation Reduction Act, the bank argued, is even more important than has been recognized so far: The IRA will “will have a profound effect across industries in the next decade and beyond” and could ultimately shape the direction of the American economy, the bank said. The report shows how even after the bonanza of climate-bill coverage earlier this year, we’re still only beginning to understand how the law works and what it might mean for the economy.
Wait, so, they passed this massive bill, which has nothing to do with reducing inflation, and they really didn’t know what it would do? That’s…..disturbing. And a dereliction of duty by the Congress
The report made a few broad points in particular that are worth attending to: First, the IRA might spend twice as much as Congress thinks. Many of the IRA’s most important provisions, such as its incentives for electric vehicles and zero-carbon electricity, are “uncapped” tax credits. That means that as long as you meet their terms, the government will award them: There’s no budget or limit written into the law that restricts how much the government can spend. The widely cited figure for how much the IRA will spend to fight climate change—$374 billion—is in large part determined by the Congressional Budget Office’s estimate of how much those tax credits will get used.
But that estimate is wrong, the bank claims. In fact, so many people and businesses will use those tax credits that the IRA’s total spending is likely to be more than $800 billion, double what the CBO projects. And because federal spending tends to catalyze private investment, that could send total climate spending across the economy to roughly $1.7 trillion over the next 10 years. That’s significantly more money flowing into green-energy industries than the CBO projected, though it’s unclear if that additional money will lead to more carbon reductions than earlier analyses have projected.
Second, the U.S. is “poised to become the world’s leading energy provider,” according to the bank. America is already the world’s largest producer of oil and natural gas. The IRA could further enhance its advantage in all forms of energy production, giving it a “competitive advantage in low-cost clean electricity and hydrogen production, infrastructure, geologic storage, and human capital,” the report states. By 2029, U.S. solar and wind could be the cheapest in the world at less than $5 per megawatt-hour, the bank projects; it will also become competitive in hydrogen, carbon capture and storage, and wind turbines. (The law will help America’s battery industry, but the bank doesn’t see the U.S. becoming the world’s biggest battery producer, given that China already has such a dominant advantage.)
Do you think China will allow the U.S. to overtake them? Or, will they simply start dumping even more onto the market and well below cost rates, like they’ve been doing? If any of that federal money dries up, U.S. companies will significantly reduce their investments. If they thought they’d make a lot of money they’d be investing it now, without all the federal kickbacks.
Finally, those of us who have long worked in climate change—and here I include myself, who started covering this topic in 2015—should have some excitement and even humility about this deluge of new talent. Even setting its arduous politics aside, managing climate change is a legitimately difficult technical and cultural problem—it’s going to require as many attentive and enthusiastic brains as possible, and the path to decarbonizing always required an infusion of new workers, investment, and good will. If you don’t yet work in the industry, but have always cared about climate change as an issue, well, this is your moment to get involved. These companies are going to need engineers, yes, but also programmers, accountants, marketers, HR staff, general counsels—there is space for everyone now.
The fight against climate change is going to change more in the next four years than it has in the past 40. The great story of our lives is just beginning. Welcome aboard.
What’s weird is they do not want to invest their own money, nor change their own lives to match their beliefs.
Read: The Climate (scam) Economy Is About To Explode Or Something »
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