Boom times for US green energy: A second, bigger factory in the US was announced in February by the well-known US-based company LanzaJet, which produces sustainable aviation fuel (SAF) from ethanol. The Inflation Reduction Act (IRA) had a major impact on this decision, according to Jimmy Samartzis, the chief executive of the corporation.

The IRA and the Bipartisan Infrastructure Law (BIL), both of which were signed into law by President Biden in August 2022 and November 2021, respectively, constitute a critical foundation for the allocation of large amounts of federal monies to the creation of renewable energy projects. These legislative measures aim to reduce emissions of greenhouse gases and encourage private investment; they will undoubtedly reshape the green industry and create new jobs, bolstering the US economy.

The IRA provides a number of financial incentives and expanded tax credits to encourage the adoption of emission-reducing technologies; it is intended to have a lifespan of 10 years and an original cost that was more than $391 billion (£310 billion), but is now estimated to approach $1 trillion. The tax credits are especially helpful for businesses that produce sustainable energy at home or make tools that are essential for the energy transition, such as batteries and electric vehicles (EVs). There are tax credits available to consumers as well, for things like heat pump installations and electric vehicle purchases.

Ascend Elements

A five-year direct investment program that supplements the IRA, the BIL is mostly funded by government grants designated for renewable energy R&D and construction projects. According to the Brookings Institution, initiatives involving sustainable energy technologies will get almost $77 billion (£61 billion) from the BIL.

One company that stands to gain from the BIL is Ascend Elements, which recycles EV batteries. The company has received funds totaling $480 million (£380 million) to strengthen its operations, and private investors have also contributed equally. This capital injection allows Ascend Elements to open their second commercial facility in Hopkinsville, Kentucky.

When taken as a whole, the IRA and BIL will have far-reaching, revolutionary consequences on established and new renewable energy technology. The legislative framework has created an enabling economic environment, which is fueling exponential growth in emerging climate solutions like clean hydrogen production, carbon dioxide capture, and SAF production, even as more established technologies like solar, electric vehicles, and batteries see a surge in private investment.

Emerging technologies like CO2 capture have seen “dramatic” growth in investment GETTY

But there are still problems, especially with the IRA’s effectiveness and its reach in some parts of the green economy. The IRA’s incentives have largely ignored wind and heat pump technology, despite the fact that these sectors have had falling investment trends. Still, everyone involved agrees that the law was crucial in getting people to invest in various renewable energy alternatives and getting new ideas off the ground.

Future changes in government leadership following the forthcoming US November elections could determine the destiny of these historic laws. The IRA and BIL have created momentum towards a sustainable and resilient economy, which is important considering the likelihood of legislative modifications or repeal.

Other countries are reevaluating their plans for producing and investing in clean energy because of the far-reaching effects of the US’s clean energy efforts. With Europe facing comparable potential and difficulties, the United States’ leadership in this field is inspiring global collaboration and collective action for a better, more sustainable future.