U.S. Clean Energy Tax Credits Worth Billions To Red, Purple States

Pensacola, Florida. Cartersville, Georgia. Greensboro, North Carolina. Ridgeville, South Carolina.

Massive clean energy manufacturing facilities and thousands of jobs have been announced in these cities – and dozens more across the country – over the past nine months, thanks to Inflation Reduction Act (IRA) clean energy tax credits.

But some Members of Congress have called for repealing these federal clean energy tax credits in exchange for raising the United States’ debt ceiling. Doing so threatens this nascent economic boom, jeopardizing hundreds of thousands of new jobs and hundreds of billions in new GDP growth, primarily in red and purple states.

Federal policy shouldn’t be a political issue, especially when it means a stronger economy and cleaner air. New Energy Innovation modeling shows the states that would reap the biggest economic rewards from IRA provisions are often represented by those clean energy tax credits’ most vocal detractors.

Prior modeling showed the law’s clean energy tax credits could increase U.S. GDP up to $200 billion and create up to 1.3 million jobs nationally by 2030. That economic upside is already playing out: IRA clean energy tax credits have already generated nearly $250 billion in project announcements that could create more than 140,000 new jobs.

This first-ever calculation of potential state-by-state GDP growth, new jobs, consumer savings, and public health benefits shows Members of Congress fighting to repeal IRA provisions are often from states – led by Texas and Florida – that have the most to lose.

IRA Tax Credits Accelerating Manufacturing, Consumer Savings Across The U.S.

Energy Innovation used the Energy Policy Simulator to study IRA effects on economic growth, jobs, and public health in the 48 contiguous states. This analysis focused on clean electricity and clean vehicle tax credits, given their outsized impact on jobs and the economy.

Two clear trends emerge: IRA clean energy tax credits are worth hundreds of billions in economic benefits, and those benefits are heavily concentrated in red and purple states. That’s unsurprising considering these states tend to have more fossil fuel infrastructure or have made less progress on policies to deploy clean energy and reduce emissions.

But regardless of how states vote, IRA provisions are clearly supercharging new clean energy development, and building all those new factories and clean energy projects creates new high-paying jobs and tax revenue that bolster regional economies. More than $70 billion has been invested in 85 new manufacturing projects since the IRA was signed, creating nearly 57,000 jobs.

Clean energy is also cheaper than fossil fuels, saving consumers big bucks. Since the IRA was signed, more than 96,000 megawatts of new clean energy projects have been announced, enough to power about 72 million homes. All that clean electricity will also generate $4.4 billion in savings for 24 million utility customers. Consumer savings often equals new spending, funding additional economic activity.

All these investments nearly cover the Congressional Budget Office’s $369 billion cost estimate of IRA provisions, but doesn’t include indirect economic activity like higher worker wages, reduced customer fuel costs, and induced spending from both.

That bigger economic impact is often lost when discussing what the government would invest in tax credits. These tax credits are a generational investment in good-paying jobs, domestic manufacturing, and public health. IRA provisions are also strengthening energy security, attracting private investment, cutting consumer costs, and re-establishing global economic competitiveness.

Bottom line, IRA funding is fundamentally remaking the U.S. energy sector, for the better.

Investing In Clean Energy Helps Prevent Billions In Climate Change Costs

While the positive economic impacts of clean energy investment are massive, the cost of inaction is exponentially larger. Continuing to burn fossil fuels will spew more planet-heating greenhouse gas emissions into our air, accelerating the extreme weather that cost our country $165 billion in 2022, in many of the same states that would benefit the most from deploying clean energy.

Texas, which would reap the largest economic rewards from IRA provisions with 100,000 new jobs and $15 billion in new GDP by 2030, also faces some of the country’s harshest climate change impacts. The state ranks second in the U.S. for wildfire risk, has already warmed 2.2 degrees Fahrenheit, and 62% of its counties were in “extreme drought” last year.

Florida, which has the second-highest forecast economic gains from IRA clean energy tax credits with 85,000 new jobs and $10 billion in new GDP by 2030, also faces severe climate change impacts. Two billion-dollar hurricanes battered the state in 2022, and Florida is suffering some of the worst sea level rise in the U.S. – up to eight inches higher since 1950, forecast to rise another inch every three years. Tidal flooding has increased 352% since 2000, putting 120,000 properties statewide at risk and requiring $4 billion in flood protection measures.

Climate risks aren’t limited to those states – the White House Office of Management and Budget forecasts unabated climate change could cost the U.S. economy $2 trillion annually by the end of the century. OMB also notes climate-related financial risks including disaster relief, flood and crop insurance, and wildfire spending could cost the federal government up to $128 billion annually by 2100.

Investing in clean energy protects every part of our country by helping prevent the worst climate change impacts, regardless of which party represents that state.

Maintain IRA Clean Energy Tax Credits For A Stronger Economy And Cleaner Air

Debt ceiling negotiations may be at a political impasse, but Americans support raising the U.S. debt ceiling and maintaining the IRA’s federal clean energy tax credits.

64% of registered voters say defaulting on the national debt would have catastrophic impacts, and 67% of those same voters support the IRA provisions. Separate polling found 60% of voters think Congress should take additional action to confront climate change, and 74% of those same voters say they would be upset if Congress overturned IRA provisions.

Members of Congress face a stark choice as they negotiate raising the debt ceiling: Maintain IRA clean energy tax credits and build a stronger economy with domestic manufacturing, new high-paying jobs, lower utility bills, and cleaner air. Or reverse course on the largest domestic economic investment in decades, tying our communities to higher fossil fuel prices and ever-worsening climate change impacts.

Choosing the latter would hurt everyday Americans the most, worsening inflation and essentially imposing a new tax on U.S. households. Why not lean into the nascent clean energy economic boom sprouting up in every corner of our country?