This is 8 Minutes a podcast helping you understand the energy and climate challenge . In just a few minutes , I'm your host , Paul Schuster . This week the Inflation Reduction Act turns one . Widely lauded as the most ambitious piece of climate legislation ever passed in the US .
The IRA allocated $369 billion towards investments in renewable energy , EVs , storage , hydrogen and other ways to transition to a cleaner , more sustainable economy . So how's it doing as we move from infant to toddlerhood ? How has the IRA stood up and what's likely for its future ?
8 minutes - it's how long it takes for the sun's rays to hit earth , or about 7 minutes longer than it takes to sell out a Taylor Swift concert . Let's get it on .
In addition to this immediate response to energy crisis , there is also more structural response coming from the countries , such as from the United States the Inflation Reduction Act , In my view , the most important climate action after Paris' 2015 agreement .
That's Faith Birol head of the International Energy Agency discussing the IRA at Davos this year . It's not hyperbole to lean into what he's saying , though I'll take it even a step further . The IRA may be even more important than the passage of the Paris Agreement in 2015 .
To have the United States allocate $369 billion towards climate was more than just a target or a commitment . These are real dollars towards real change , and the change is happening . The IRA turns one on August 16th of this week , and the impact of that legislation is being felt not only here in the United States , but across the globe as well .
At home , the immediate impact has been a flood of new investment into domestic manufacturing and renewable energy projects A $1.8 billion semiconductor facility in Wichita , kansas . A $5 billion auto facility in Barton County , georgia . A $1.2 billion battery plant in Tucson , arizona .
The American Clean Power Association indicates that over 80 major clean energy manufacturing facilities have been announced since the passage of the law . That's equal to the investment of the previous seven years combined .
Goldman Sachs came out with a report in April indicating that the public funds from the IRA are likely to unleash an additional $3 trillion in private investment over the next decade , and those investments are flowing to all manner of states . Forum Energy announced a new facility for West Virginia .
Solar manufacturing facilities are popping up in Georgia and Virginia , a new battery plant in Michigan . When the IRA was first released , the Congressional Budget Office estimated that the cost of the bill would be that $369 billion number that's been referenced so frequently , but that always depended upon the adoption and uptick of the law .
The Brookings Institute released their own analysis in March after about six months of having the law on the books , and revised that number up to nearly $1 trillion . Now budget hawks may be squeamish about such an increase in costs but , as Justin Warland of Time Magazine points out , that uptick just means that the law is working .
In addition to those manufacturing investments , new renewable projects are soaring . The climate partnership indicates that the IRA has launched up to 272 new renewable projects across 44 states , and with those investments have come jobs .
Initially , the Labor Energy Partnership estimated that the bill would add about one and a half million clean energy jobs to payrolls over the course of the next decade . Let's revise that , as climate power is indicating that the first year alone created over 176,000 new jobs .
New manufacturing , new renewable energy projects , new jobs , and those are translating through to prices that customers are paying as well . Take the solar market as a microcosm of what's happening everywhere . Covid was unkind to the renewable energy market , a big part being because so much of our burgeoning solar industry relies upon imported panels from China .
As supply chains collapsed and US-China relations soured , solar costs began to rise significantly . Today it's another story . Domestic manufacturing is bringing some of that supply chain back home and increased performance is driving installations again .
For the first time in three years , the cost of solar dipped lower again , and experts at Wood McKenzie indicate that 6.1 gigawatts of solar were installed in the first quarter this year , the best first quarter in history for the industry . And the impact of the IRA isn't just being felt here in the States .
Our neighbor , canada , released their own version of the IRA in April , with about 80 billion dollars allocated towards clean energy investments In Europe . Well , they initially praised the climate bill before digging in and realizing how the legislation favored US domestic manufacturing .
The knee-jerk reaction was resentment , epitomized in the releasing of Europe's Green Deal Industrial Plan , aimed at building up European manufacturing with over 250 billion in investments . Today the temperature is cool to bid and both the Americans and Europeans are working together to craft a path forward with a goal everyone can stand behind , that of reducing emissions .
And on that the IRA appears to be working , both in its stated goals of creating jobs , incentivizing new domestic manufacturing and promoting clean energy . And it's also serving as a catalyst for other countries to invest in their own supply chains and , frankly , to overcome some of the barriers that exist because of China's grip on clean energy manufacturing .
And the IRA is working where it matters most reducing emissions . The Rodeum Group estimates that US emissions are now likely to come down between 29 and 42 percent by 2030 . That's great , but it's still a wide range . What's keeping us from reaching that top number ? Most experts point to transmission bottlenecks .
Right now , it's a mess trying to build new projects and get them connected to the grid permitting delays , interconnection queues , lack of high-power transmission in the first place .
A Princeton University report estimates that up to half of the IRA's potential emissions reductions could be lost unless new transmission is developed , which is why the EPA took tentative steps in this direction last month with the release of new rules around permitting and interconnection reform .
In essence , the new rules shift from a first-in , first-out system for permitting to one of first-ready , first-out . Developers who have viable opportunities can now streamline their permitting process and hopefully get to market quicker , but broader transmission efforts are still needed , and this is a topic that will likely stay top of mind for the next few years .
In any regard , as the IRA celebrates its first birthday , the overwhelming consensus is that it's been a success . Billions of dollars in new manufacturing is being built , hundreds of thousands of jobs are being created and emissions are coming down . International communities are following suit and creating their own versions of climate legislation in response .
To go back to the Faith Birol quote from earlier , the Paris Agreement was remarkable in that it orchestrated a global commitment towards climate change , but the IRA may have done something even more than that . it actually did something about it . I'm Paul Schuster , and this has been your Eight Minutes .