Clean Energy Projects On the Rise Following Bill Passing

In August of this year, the Biden Administration signed into law new climate legislation as part of a broader tax, health and energy bill called the Inflation Reduction Act Since then, investments in clean energy projects have been on the rise, partly due to the financial, loan and tax incentives involved.

The bill has sparked new investments and interest in green projects for business of all sizes. Their scope ranges from battery technologies to clean energy generation to electric cars and onto other major environmentally-conscious developments. Many major companies operating in the U.S have gotten onboard.

One notable example is Toyota, which has claimed that it will invest a further $2.5 billion in a new North Carolina electric car battery production factory for its hybrid and electric vehicles. Honda and LG Energy Solution have for their part also pledged to spend $4.4 billion on their own battery factory at a still-unnamed location.

Solar power certainly can't be excluded from these tax-advantaged future plans either. That's possibly why First Solar, a major manufacturer of solar panels, has also said that it would be investing as much as $1.2 billion in its fourth factory so far in the United States.

Pledges Aplenty, but Results When?

One major problem with the above promises and many others spurred into gear by the Biden bill's energy and green provisions is that they all revolve around things to be done but hardly started. The pledged factories will all require years to build and doing so will involve new consumption of resources, transport fuel use and extensive, time-consuming supply chain logistics.

Both the Toyota and Honda/LG plants won't be operational until 2025 at the earliest, and for the First Solar project, there is no timeline at all yet.

To be fair, some of these and other projects were first being developed even before the recent energy bill, so the fundamental motives behind them aren't always about taking advantage of politically-motivated tax incentives. Other, harder legal and geopolitical factors have also played a part in promoting faster green investment.

Harder Motivators for Domestic Energy Investment

Other factors are also inducing greater domestic green investment on both government and corporate levels. For one, the reverberations in trade and supply chain disruptions caused by the Pandemic are still being felt worldwide. A trade war with China and free-trade agreement changes with neighboring Canada and Mexico have also made certain companies invest closer to home.

More recently, the ongoing war between Russia and Ukraine, along with its possibly major geopolitical ramifications, has also been a huge source of tension.

Toyota North America's CEO has asserted that Toyota was making an effort to source raw materials and components for batteries from the United States and its trade allies. This is something that the climate and energy bill promotes in its provisions.

A Long-Term Plan for Energy Supply Independence

Overall, the Biden Administration legislation strongly aims to push government policy and the U.S market towards independence from foreign suppliers like China. It aims to create legal and financial confidence in safe investment returns on green energy projects by U.S-operating companies.

It's estimated that renewable energy investment will in any case grow to a hefty $1.2 trillion by 2035. Most likely, this will happen because of a broad mix of market, geopolitical and legislative pressures.

So far, the Inflation Reduction Act itself has pumped, pledged or guaranteed $369 billion to support the acceleration of these measures for a country based on renewable that can be sourced close to home.