“66 percent of all of the spending in the IRA has gone to red states...There certainly is a contingency in the Republican party now that’s going to support keeping some of those subsidies around.”
We’ve been closely watching what the change of administration will mean for green tax incentives under the Inflation Reduction Act (IRA). The shift in leadership brings both uncertainty and potential changes to the future of clean energy investments in the United States.
While Trump has expressed skepticism about green subsidies, the IRA's broad economic impact and support from moderate Republicans make a complete repeal unlikely.
The irony that works in climate’s favor
Despite potential policy changes, the economic benefits of the IRA, such as job creation and investment in disadvantaged communities, may limit the extent of any rollbacks. The broad support for these benefits could help maintain some level of stability in the market.
Data confirms that clean energy investments and job creation are occurring across the country and disproportionately in Republican-represented districts and states. Even oil companies have urged Trump to maintain certain Inflation Reduction Act provisions for renewable fuels, carbon capture, and hydrogen.
Since the IRA was enacted in 2022, it has been a cornerstone in promoting clean energy investments through various tax credits and incentives. These include the Investment Tax Credit (ITC), Production Tax Credit (PTC), and specific incentives for technologies like green hydrogen, electric vehicles, and renewable energy projects. The act has significantly boosted investments in clean energy, with over $130 billion in private investments and more than 270 clean energy projects announced in its first year.
The IRA has already created more than 330,000 jobs. Clean energy investments and new jobs are occurring across the country and show higher in Republican-represented districts. This is projected to be 621,000 direct and indirect new jobs– including 154,000 permanent jobs over the next five years.
E2's report revealed that since the IRA has been passed:
19 of the top 20 congressional districts for clean energy investments are held by Republicans including North Carolina, South Carolina, Georgia, Nevada, Michigan, and Texas.
The manufacturing sector is at the top, with more than 90% of all projects.
215 clean energy projects landed in Republican districts, compared to 119 in Democratic ones.
Seven states — Arizona, Nevada, North Carolina, Georgia, Michigan, Wisconsin and Pennsylvania — are on track to host 44% of the clean energy manufacturing projects.
What’s next?
While there may be short-term volatility, the long-term outlook for clean energy investments remains positive. Private sector investments and state-level initiatives are likely to continue driving growth in the renewable energy sector, regardless of federal policy changes. October announcements of major clean energy projects across renewable energy, battery storage, transmission and grid, electric vehicles and other clean energy industries total 354 since the IRA has been signed into law.
Results speak volumes. If you ask us, this is a win for the clean energy economy.