Two years of the IRA: Triumphs and delays

Just weeks ago, the most pressing question about the Inflation Reduction Act was about its fate: would a Republican takeover of the White House and Congress be a death knell for the law? In the wake of June’s disastrous debate between the current and former presidents, anxiety set in among clean energy leaders about what the law’s repeal would mean.

But that anxiety may be receding. Since President Joe Biden dropped out and Vice President Kamala Harris became the Democratic party’s presumptive nominee, optimism has surged alongside the party’s poll numbers.

And Republicans have softened in their opposition to the law. Earlier this month, 18 GOP lawmakers signed a letter addressed to House Speaker Mike Johnson (R-La.), recommending the party tread carefully. Both industry and constituents have gotten in touch to voice their support for the IRA, the members wrote, adding that a full repeal “would create a worst-case scenario where we would have spent billions of taxpayer dollars and received next to nothing in return.”

Of course, Democrats would rather not test what happens to the IRA with Donald Trump back in the White House. But to use the law as an election talking point, Democrats have to reverse an initial messaging failure: most voters knew very little about it. A November 2022 poll by Data for Progress found that just 39% of likely voters even knew the law had been passed and signed into law, and a smaller number of voters were familiar with major provisions such as tax credits for clean energy.

Today, two years since the IRA’s signature, the Biden administration and a slew of research organizations are quantifying the law’s impact and emphasizing its benefits.

And while there is certainly room for improvement in its rollout — certain projects are stalled, and certain industries remain in regulatory limbo as they wait for final rules, for instance — it is clear that the IRA has caused a surge of clean energy development and onshoring since becoming law two years ago. The business group E2 found that there have been 334 clean energy projects announced since the passage of the IRA, amounting to nearly $126 billion in investments across 41 states. Those include 79 solar or solar-related projects, and 54 battery or battery-related projects. 

The IRA according to the White House

The White House is framing the IRA’s clean energy benefits in three buckets: tax credits that incentivize industry investment and create job opportunities; grants, loan, and rebate funding for low-income and so-called “energy communities” that have been underserved historically; and consumer rebates for individual families buying technologies like solar panels, electric vehicles, and heat pumps.

John Podesta, the president’s senior adviser for clean energy innovation and implementation, spoke this week at the think tank Third Way, outlined these investments as evidence that “the largest climate investment in history is working.” 

And on the Political Climate podcast, he reflected further on the bill’s triumphs.

“Are there hiccups? Yes. Do we try to overcome them? Yes,” he said on the episode. “But I think we're seeing remarkable progress and the private sector remains enthusiastic about the ability to invest in America.”

On the job front, Podesta’s point was bolstered by a new analysis from the communications firm Climate Power, co-founded by Podesta himself, which found that the IRA has resulted in more than 334,000 new “good paying” clean energy jobs. 

(Last December, Climate Power launched a year-long $80 million digital and television advertising and education campaign to make voters aware of the Biden administration’s climate record.)

While some of the IRA’s benefits are still being rolled out, Podesta said that “federal agencies have already awarded nearly two-thirds of all available grant, loan, and rebate funding.” And of the 24 tax credit provisions, Treasury guidance is available on 21 of them. 

Last week, the Internal Revenue Service released a stock-take of its own, which found that more than 3.4 million families took advantage of rebates for home energy upgrades in 2023, the first full year they were available. Those savings amounted to more than $8 billion in total. 

Benefits to the GOP

These dramatic benefits, however, are no guarantee of the IRA’s ability to endure. One element that may insulate it, though, is the concentration of those benefits in red-leaning parts of the country.

“People are asking if that investment can really stick regardless of who is in power here in Washington,” Podesta said this week. “My answer…is yes. No Republicans voted for the IRA—but they know their constituents are receiving the benefits.”

Estimates vary on the specifics, but it has become clear that the bulk of investments resulting from the IRA have gone to congressional districts that lean GOP. According to a CNN analysis of Rhodium Group and MIT data, they’ve received nearly 78% of the investments, which include factories to build new EVs, batteries, and solar materials.

And E2’s data put the share even higher, at 85% of investments going to Republican districts; that amounts to 60% of the announced projects and 85% of the jobs.

Room for nuance

However, all has not been entirely smooth.

According to a Financial Times analysis, 40% of the major manufacturing projects resulting from the IRA have been plagued by delays. The newspaper looked specifically at the 114 projects worth more than $100 million each, and found that of the $227.9 billion in investment they represent, $84 billion have been delayed for between two months and several years, or are on pause indefinitely.

The reasons for the delays include shifting market conditions and a demand slow-down, which are problems that plague the climate tech and energy markets as a whole. But some projects cited a lack of policy certainty — both because of the election and because of tax credit rules that have yet to be finalized.

For instance, one green hydrogen developer told Latitude Media as early as in February that its project was on indefinite pause while waiting for the controversial 45V tax credit requirements to be finalized. As of August, those developers are still in limbo. 

This nuance is not necessarily a strike against the law, but rather evidence of the inherent challenge of rolling out the country’s biggest-ever climate investment. And for a potential Harris administration, it may also amount to a to-do list. According to a report published last month by the Rhodium Group, it is expected that electing a Democrat would lead to further climate action, cementing the IRA’s emissions reductions and encouraging further investments by the private sector.