The misleadingly named Inflation Reduction Act was signed into US law by Joe Biden in August last year. It is perhaps the most significant piece of climate legislation passed in the Western world, with US $660 billion in tax incentives for clean energy manufacturing and a further $100 billion in direct investments.
What effect has the Inflation Reduction Act had since 2022?
The effects of the Inflation Reduction Act (IRA) over the past year have been traced by environmental historian Jay Turner. According to Turner, there are already 77 major projects drawing on IRA credits and funds, with a total investment so far of $79 billion.
The chart below shows this tremendous bounce in clean investments.
America being America, the lift-off has centred on the auto-making value chain. For instance, Toyota has now invested $13.9 billion in battery-making in North Carolina, employing 5,000 workers. Exxon is spending $2 billion on lithium extraction in Arkansas. Stellantis (Chrysler, Citröen, Peugeot) is spending $3.2 billion to make batteries in Illinois
Then there is Ford, which is planning twin EV plants in Kentucky and Tennessee. The reported investment is $11.4 billion and over 10,000 ongoing jobs.
Moreover, the US auto-workers union has been negotiating hard in each of these cases. Ford is reported to have reached an agreement with the union to pay plant workers US $21 to $37 per hour. The starting wage at Stellantis plants is reportedly $30/hr and caps out at $42/hr.
Hundreds of thousands of new jobs at a living wage spells meaningful restoration of the American heartland.
Why does it matter? For one, it means the wheels are seriously in motion on the energy transition. Solar and wind have been rolling out rapidly, it seems the IRA will have electric vehicles following soon after.
But two, the degeneration of American society that was on display on 6 January 2021 is a dangerous thing for the world. This American-style of nation-building (i.e. cars and cheap energy) that the Biden administration has helped set it motion suggests the US has already hit rock bottom and is already on its way back up.
Feature image shows Ford’s plans for its Blue Oval EV plant in Kentucky.
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