Biden's carrot patch: The whole (energy) world loves the Inflation Reduction Act

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OPINION>ENERGY AND ENVIRONMENT
THE VIEWS EXPRESSED BY CONTRIBUTORS ARE THEIR OWN AND NOT THE VIEW OF THE HILL

Biden’s carrot patch: The whole (energy) world loves the Inflation Reduction Act

BY LEVI TILLEMANN, OPINION CONTRIBUTOR - 03/11/23 1:30 PM ET

https://thehill.com/opinion/energy-environment/3895411-bidens-carrot-patch-the-whole-energy-world-loves-the-inflation-reduction-act/

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The catalyst for clean energy investment has always been a mix of regulatory “sticks” and industrial policy “carrots.” For now, industrial policy is on the ascent. Last week U.S. Secretary of Energy Jennifer Granholm walked into S&P Global’s CERAWeek (an 8,000-delegate conference sometimes called the “Davos of Energy”) advertising a big, fat, juicy bag of carrots — courtesy of the Inflation Reduction Act (IRA). “[That’s] 10 years of IRA carrots you can take to the bank,” she proclaimed. Indeed, sometimes CERAWeek looked like an industry stampede toward a Biden administration carrot patch — a stampede that promises to unleash an avalanche of investment and innovation in the years to come.

CERAWeek convenes annually in Houston, Texas. And despite the city’s oil and gas bona fides, it draws a diverse audience, including African oil ministers, utility execs, academics and policymakers, as well as an increasingly important coterie of players in the battery, wind and solar industries. The conference’s founder and patron saint, Pulitzer Prize Winner Daniel Yergin summed up this year’s vibe in a conversation with the CEOs of two major oil companies, Hess and ConocoPhillips. “The big discussion this week,” he said, “is the Inflation Reduction Act.” The reason is simple: The IRA has shifted the calculus of global energy markets.

The importance of this recalibration cannot be overestimated. America has traditionally been the developed world’s most free-market economy. For many decades, America’s light-touch approach has allowed energy players to shuffle capital, squeeze workers, buy back shares, offshore investments and environmental problems while onshoring profits. But to profit from the IRA companies will have to do just the opposite: onshore supply chains, pay prevailing wages, invest handsomely in U.S. manufacturing communities, as well as adhere to strict environmental and labor standards.

The IRA is a grab bag of policy goals. On the one hand, it’s an effort to onshore sensitive manufacturing and supply chains from economic competitors like China. But it’s also America’s largest ever foray into addressing climate change. It subsidizes a wide swath of clean energy tech and goes one step further by providing rich incentives for carbon capture and sequestration efforts. The IRA is also an effort to harvest the fruits of lavish government spending on white coat innovation and distribute them to blue collar workers in the form of quality manufacturing jobs. America has been the world’s largest investor in research and development (R&D) for as long as anyone can remember, with the federal government as the largest investor in basic R&D. But in sectors ranging from computer chips, to solar panels, to flat screen TVs and electric cars, other countries have captured large market shares through policy incentives for manufacturing and deployment. In comparison, America has been relatively stingy in its efforts to plow government capital into manufacturing and strategic sunrise industries.

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[Hortensis]

1. :) Wow! OUR "IRA has shifted the calculus of global energy markets."

As it's intended to do, of course, but -- it's happening!

This is well worth reading. I keep forgetting all the very impressive IRA goals and kick-offs is meant to accomplish so that each time I'm newly inspired and hopeful.

WE're doing some climate good and at the same time good on many other fronts, including creation of spread-the-prosperity jobs.

The importance of this recalibration cannot be overestimated. ... to profit from the IRA, companies will have to do just the opposite: on-shore supply chains, pay prevailing wages, invest handsomely in U.S. manufacturing communities, as well as adhere to strict environmental and labor standards.