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President Joe Biden’s landmark climate law is driving huge clean energy funding toward low-income, less educated, fossil fuel-burning cities, according to a new analysis the Treasury Department will release Wednesday.
An estimated 81% of investments in clean projects since the passage of the Inflation Reduction Act last year have been in counties with below-average weekly wages, and 86% are flowing to those with graduation rates. below-average college students, according to the report seen by NBC. News.
Additionally, about 70% of clean energy investments since the law’s passage last year have been in counties where a smaller proportion of the population is employed, “suggesting weaker labor markets overall,” according to the report.
The analysis “shows that funding is going where it’s needed most across the country, not just to the coasts or wealthy communities,” Treasury Secretary Janet Yellen said in a statement.
The study also found that so-called energy communities (those with historical ties to fossil fuel industries like coal) have seen some of the fastest growth in these investments.
Using data from the Massachusetts Institute of Technology and Rhodium Group, a research firm, Treasury researchers analyzed clean energy project announcements made before and after Democrats approved the IRA along party lines in August 2022. law, the largest investment package ever passed aimed at curbing climate change in the nation, contains a tax credit for clean electricity development along with a stepped-up “bonus” credit for energy communities.
To assess the impact of the bonus credit, researchers identified 4,729 projects, totaling more than $352 billion, between 2018 and June 2023 that would have been or are currently eligible to receive it, including 713 post-IRA projects for a worth more than $101 billion.
Within energy communities, the report found, clean investment announcements grew to an average of $5 billion per month after the IRA was enacted, up from $2 billion previously in those areas and $2 billion per month. .5 billion dollars in the rest of the country. In non-energy communities, the monthly increase was about $4 billion after the IRA.
Eric Van Nostrand, a Treasury economist and co-author of the report, said it will be years before the full impact of the IRA is assessed, but “the data is as encouraging as it could be at this stage that the money is making a difference in the life”. the communities that need it most,” he said.
While the report did not identify whether projects in energy communities were actually taking advantage or planned to take advantage of the additional tax credit, Van Nostrand said the analysis “suggests that the bond is working as intended.”
As Biden looks toward re-election next year, he is increasing his outreach to small-town voters who have leaned Republican. In the process, he has touted new investments in rural areas, such as the $5 billion his administration implemented this fall to boost agriculture and infrastructure there.
Treasury report comes two days after Energy Department revealed $275 million in financing of the Bipartisan Infrastructure Act to support clean energy projects. On Wednesday, Biden will be in Colorado to make the case for job creation fueled by the state’s expansion of wind tower manufacturing.
Economists and clean energy experts said the new findings largely show that the White House’s overall policy ambition — to accelerate the green transition while improving economic equity — is off to a good start.
“If you’re trying to minimize the transition costs of moving to renewable energy, then you probably want to target the communities that will be hardest hit,” said Mark Curtis, an economics professor at Wake Forest University and co-author of next research which shows that the vast majority of workers who have left “carbon-intensive” jobs in recent decades have not moved on to a “green” one.
“It makes sense for those production credits to go to lower-income areas of the country,” said Curtis, who praised the IRA for shifting more renewable energy incentives upward, compared to previous consumer-targeted policies that often benefited to the richest households.
Other policy experts said it’s still an open question whether the economic changes pushed by the law will take effect widely and quickly enough to boost Democrats politically next year.
Samantha Gross, director of the climate and energy security initiative at the Brookings Institute, a left-leaning think tank, said much of that will depend on bureaucratic political measures – such as obtaining municipal building permits – that can be governed by local or partisan forces.
“You have to do that to have steel in the ground,” he said. “It’s an additional challenge that the IRA is not addressing.”