Cheaper Than Imports? US Counts On Inflation Reduction Act To Galvanise RE Manufacturing

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Researchers at Dartmouth and Princeton released a report on the estimated impacts the Inflation Reduction Act will have on the US wind and solar industry, including changes in wind and solar manufacturing, labor standards for clean energy workers, job creation, and demand for materials. Specifically, the report explores the impacts of the law’s clean electricity production and investment tax credits and the 45x Advanced Manufacturing Production Tax Credit. The research was funded by the BlueGreen Alliance.

The report finds that wind and solar developers will reap significant cost savings by using US-manufactured components and paying workers fair wages, due to the investments in the Inflation Reduction Act. The act authorises $891 billion in total spending, including $738 billion on clean energy and climate change, which includes generous support for US-based manufacturing in these areas.

“Using U.S.-manufactured parts and materials for clean energy development and paying workers a fair wage has always been the right thing to do. Now it’s also the most economical thing to do,” said BlueGreen Alliance Executive Director Jason Walsh. “This report shows that the Inflation Reduction Act successfully creates an air-tight business case for supporting U.S. workers and manufacturers.”

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The topline findings of the report include:

• For the first time in US history, using U.S.-made wind and solar components will be cheaper than importing them.
• It pays to pay workers well. Wind and solar developers can significantly cut costs by meeting prevailing wage and apprenticeship criteria to take advantage of the full value of the clean electricity tax credits.
• The new report finds that when a developer meets the prevailing wage and apprenticeship standards,the cost of producing solar or onshore wind power drops more than 60%, relative to deciding not to offer workers fair pay and career pathways.Any additional project costs associated with meeting these labor standards are more than offset by the full credit. Costs will likewise be roughly 20% cheaper for offshore wind projects that meet these labor standards than projects that do not.
• Together, the clean energy tax credits and the 45X manufacturing tax credit will induce demand for more than 4 million additional solar and wind jobs—about 3.7 million additional jobs related to utility-scale solar PV and about 0.4 million additional wind-related jobs in 2035 will be induced, compared to projected employment levels if the Inflation Reduction Act had not passed.
• The Inflation Reduction Act will significantly increase demand for US-made aluminum, cement, and steel for use in solar and wind projects. Expanding clean U.S. aluminum and steel production for clean energy will better support our climate goals than relying on emissions-intensive imports. The US already produces cleaner steel on average than all of the world’s other major steel producers. By using Inflation Reduction Act funding to cut emissions in these industries while expanding production, the U.S. can meet the growing materials needs of the clean energy economy.

“The study reveals how the Inflation Reduction Act transforms the economics of wind and solar power to help delink our climate goals from overseas supply chains that are marred by labor abuses, higher levels of pollution, and shipping bottlenecks,” said BlueGreen Alliance Vice President of Manufacturing and Industrial Policy Ben Beachy. “Instead, these new investments offer an opportunity to build our clean energy future on a foundation of good jobs, clean manufacturing, and a more reliable and equitable industrial base.”

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