Biden approves largest energy spending bill in U.S. history
After the House passed the Reducing Inflation Act of 2022, U.S. President Joe Biden recently signed the bill, ushering in a new era of $370 billion in U.S. climate and energy spending.
Signing the Reducing Inflation Act into law marks what will be the largest climate and energy spending package in U.S. history. The energy, climate and tax bill includes $600 billion in spending, including $370 billion to support renewable energy and strengthen climate resilience.
The Reducing Inflation Act, which calls for a nationwide cut in carbon emissions by about 40 percent by 2030, also aims to save Americans on energy costs. The U.S. government says 7.5 million households will install rooftop PV systems and receive a 30 percent tax credit. And households who take advantage of the Clean Energy, Efficiency and Electric Vehicle Tax Credits will save more than $1,000 a year.
The spending would provide funding by plugging tax loopholes for wealthy Americans and businesses. The U.S. government said that in 2020, the 55 largest U.S. businesses did not pay taxes. It is estimated that the top 1 percent of earners can avoid $160 million in taxes annually. By closing tax loopholes and imposing a minimum corporate tax rate of 15% on the largest and most profitable businesses, the Reducing Inflation Act is expected to generate more than $124 billion in additional revenue over the next decade.
Photovoltaic systems will play a central role in decarbonizing and saving energy in the United States. An estimated 950 million photovoltaic panels, 120,000 wind turbines and 2,300 grid-scale battery storage systems will be installed in the United States by 2030.
George Hershman, CEO of SOLV Energy, a leading utility-scale PV developer, said: “We can now rest assured that government leaders have taken action to reduce energy costs, strengthen America’s energy independence, and will generate hundreds of thousands of high-paying jobs. jobs, while addressing the devastating effects of climate change.”
The key to this plan is to extend the investment tax credit for commercial and residential PV projects for 10 years at a rate of 30%, including PV projects installed in 2022. For large-scale photovoltaic projects with an installed capacity of more than 1MW, the default tax credit rate is 6%. And in order to be eligible for an additional 24% tax credit, workers and engineers who install PV projects must be paid prevailing wages; a further 10% can be added if the project has a specified amount of domestic product, and PV sited at a specified location The program also increases by 10%, as well as provides additional credits for clean energy production.
“This is a historic moment for our country! Sunrun applauds the U.S. Congress and the Biden administration for this important step forward,” said Mary Powell, CEO of Sunrun. will fight inflation, lower energy prices, and help America meet climate goals. It will boost domestic manufacturing, create millions of high-paying jobs, provide access and equity for those who need it most, and improve the power grid Stability and resilience.”
The domestic manufacturing clause is at the heart of the act. About $30 billion in production tax credits will be allocated to U.S. manufacturing of photovoltaic modules, wind turbines, batteries and critical mineral processing. In addition, $10 billion in investment tax credits will be allocated to manufacturing facilities for electric vehicles, wind turbines and photovoltaic modules.
The U.S. Defense Production Act will provide $500 million in grants for heat pumps and processing of critical minerals, and $2 billion in grants to improve existing auto manufacturing facilities to make clean vehicles such as electric and hybrid vehicles . In addition to these funds, up to $20 billion in clean vehicle manufacturing credits will be provided. In addition, approximately $2 billion will be provided to U.S. national laboratories to accelerate breakthrough energy research.
Mark Widmar, CEO of First Solar, said: “The passage of the Lower Inflation Act by the U.S. House of Representatives is a victory. First, it represents an opportunity to achieve energy security and ensure the fight against climate change, a once-in-a-lifetime opportunity that represents the United States values and principles, and produced stateside. Second, it is an opportunity to ensure that the benefits of this groundbreaking legislation are shared, creating jobs and economic value where it is most needed. Finally, it will foster the necessary innovation cycle , to ensure U.S. leadership in clean energy technologies and ensure that the next generation of photovoltaics is developed and manufactured in the United States.”
As a result of this bill, the U.S. utility-scale PV market is likely to grow from annual installations in 2020, researchers at Princeton University and Dartmouth College noted in the Rapid Energy Policy Evaluation and Analysis Toolkit (REAP). Rapid growth of 10GW to 49 GW of annual installations by 2024. By 2030, the U.S. could install more than 100 GW of photovoltaic systems annually, the researchers said.
U.S. PV investment could reach $321 billion by 2030, nearly double the $177 billion expected under current policies. The report also noted that the bill would generate nearly $3.5 trillion in cumulative capital investment in new energy supplies in the U.S. over the next decade.
Under the act, U.S. annual energy spending is projected to fall by at least 4 percent through 2030, saving households, businesses and industries nearly $50 billion annually.