When the Inflation Reduction Act (IRA) was passed on Aug. 16, 2022, it was hailed as “the most significant action Congress has taken on clean energy and climate change in the nation’s history,” and for good reason. The impact of the legislation over the next decade cannot be overstated.
The IRA is expected to unleash a total of about $370 billion in climate investments that will advance clean energy solutions, lower energy costs, bolster supply chains, and create about 1.5 million good-paying, high-quality jobs. Forty percent of those benefits are heading to communities that are marginalized, underserved, or facing pollution, to deliver environmental justice so that no one gets left behind. The IRA includes special commitments to working families, rural neighborhoods, communities that relied on closed coal mines or coal-fired power plants, and Tribes.
The hoped-for effect is a 40% drop in greenhouse gas (GHG) emissions across the entire economy compared to 2005 levels. In fact, it is possible that emissions reductions will reach more than 1,000 million metric tons of carbon dioxide equivalent (CO2e) or the combined amount of emissions from every American home annually.
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While not all the grants, loans, tax credits, and other investments and incentives have been rolled out yet, the impact has already been felt a little more than two years since its passage. Some of the areas that are noticing it the most, in fact, are the Rust Belt and the Sun Belt.
Taken from candidate Walter Mondale’s claim that President Ronald Reagan was “turning our industrial Midwest into a rust bowl” during the 1984 presidential campaign, the Rust Belt spans Wisconsin, Illinois, Indiana, Michigan, Ohio, and Pennsylvania.
They were once home to the coal, steel, and manufacturing industries that experienced a decline starting in the 1950s and plummeted through the 1970s, leaving behind rusting abandoned factories and mines.
The region’s decline was so significant that artists like Bruce Springsteen and Billy Joel were moved to capture the emotional turmoil experienced in specific communities with their respective songs “Youngstown” and “Allentown.” However, with the help of the IRA, the Rust Belt is reclaiming its status as a national hub for the automotive industry and manufacturing sector.
Named by an aide in the White House under President Richard Nixon, Kevin Phillips, in his book “The Emerging Republican Majority,” the Sun Belt stretches across the southern third of the country, from the Southwest to the Southeast. It stretches across California, Nevada, Utah, Arizona, Colorado, New Mexico, Oklahoma, Texas, Kansas, Louisiana, Arkansas, Mississippi, Tennessee, Alabama, Florida, North Carolina, South Carolina, and Georgia.
After World War II, the region experienced significant birth rate growth, expansion in housing supply, and increases in productivity and economic opportunities. The warm climate was also all the more attractive with the arrival of air conditioning. In fact, last year, The Economist reported that 12 of the 15 fastest-growing cities in the U.S. are located in the Sun Belt. Its time to shine is continuing with an influx of funding opportunities from the IRA.
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In October, E&E News published an analysis of the amount of private investment and number of jobs heading to these regions, particularly to the swing states located there, by synthesizing three separate databases: a Manufacturing Investment Announcements site from a policy analyst at Energy Innovation named Jack Conness, E2’s Clean Economy Works, and Atlas Public Policy and Utah State University’s Clean Economy Tracker.
Each report measures the impact of each new clean energy or technology manufacturing project or facility announced since the IRA.
However, they differ in material ways. As Conness explained to E&E News, “Tracking these investments is more of an art than a science.” Differences appear on the manufacturing sector level, for example. According to E&E, E2 and Atlas included hydrogen and fuel cell technology in their analysis, while Conness did not. E2 did not count projects developing critical minerals, while Atlas did not count semiconductor manufacturing facilities.
The numbers in each are also updated at different intervals by different parties. At the time of this analysis, Conness’s numbers were from September (his site was then updated in November), while E2 was revised to capture the end of October and Atlas’s extended into November. While the numbers from each are different, they largely tell the same story.
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Since August 2022, each database estimates that more than $100 billion has already been invested through the IRA. Conness estimates more than $115 billion, E2 estimates almost $120 billion, and Atlas estimates more than $153 billion. The expected number of jobs created during that time ranged from estimates of more than 94,000, with Conness again on the low end, to over 106,000 according to E2, to almost 161,000, with Atlas again on the high end.
These total differences are also reflected in the different number of projects and facilities each has counted since August 2022: 180 for Conness, 286 for E2, and 724 for Atlas.
Out of those total amounts, a huge proportion of funding goes toward the Rust Belt and the Sun Belt. According to Conness’s numbers, the Rust Belt and Sun Belt together account for almost $106 billion in investment (over 92% of the total) and almost 89,000 jobs (nearly 94%). E2’s numbers indicate almost $115 billion in investment (nearly 96% of the total) and almost 98,000 jobs (nearly 92%). Atlas’s estimate is almost $141 billion in investment (nearly 92% of the total) and more than 147,000 jobs (over 91%). Each estimate projects that these two regions are receiving at least 91% of the investment and jobs in the clean economy since the passage of the IRA.
The numbers don’t change much, even when California is excluded. E2 still estimates the two belt regions together receive over 94% of investment and nearly 92% of jobs; Atlas’s estimates are slightly lower at over 88% of investment and over 85% of employment positions but still maintain a clear majority.
The obvious conclusion is that the southern U.S. and the old mining and industrial regions in the upper Midwest are the main regions benefiting from the country’s clean energy boom.
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As expected, the Sun Belt, which spans across far more states, is responsible for more of this activity, with investment estimates spanning more than $75 billion in Conness’s database and over $97 billion in Atlas’s, and percentages ranging between over 63% of the national total in Atlas’s and about 72% in E2’s.
Job estimates span more than 63,000 in Conness’s dataset and over 112,000 in Atlas’s, with percentages of the national total extremely close, between nearly 67% and 70% for all three datasets. Even without California, the Sun Belt has still received between almost 60% and nearly 71% of the nation’s total IRA investments and more than 63% to over 69% of the total jobs.
However, The Rust Belt should not be written off as a non-beneficiary. Investment estimates span almost $29 billion in E2’s dataset and almost $44 billion in Atlas’s, with percentages ranging between nearly 24% of the national total in E2’s to over 28% in Atlas’s. The job estimates span almost 24,000 in E2’s data and more than 35,000 in Atlas’s, with percentages ranging between approximately 22% of the national total in E2’s and Atlas’s to nearly 27% in Conness’s.
And why not? It makes perfect sense for the Rust Belt to get in on the action. As E&E explains, those states have long been centers of automotive manufacturing, and clean transportation is an exploding industry.
E&E says that based on E2’s numbers, 92% of post-IRA announcements in the manufacturing sector, in particular, are headed for electric transportation.
“They’ve built infrastructure over the years in those two areas, like transportation, accessibility of waterways, and railway infrastructure,” Conness told E&E. “It just makes business sense to find yourself in an area that’s already close to other manufacturing businesses, close to infrastructure that’s already built to accommodate the decisions that they’re making or the products that they’re about to make.”
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Just as significant is the role that many of these states play in national elections. So-called “swing states” include Wisconsin, Michigan, and Pennsylvania in the Rust Belt and Nevada, Arizona, North Carolina, and Georgia in the Sun Belt.
Conness estimates that these seven states, in particular, have received almost $55 billion in investment (nearly 48% of the national total) and almost 39,000 jobs (nearly 41%). E2 estimates almost $61 billion in investment (nearly 51% of the national total) and almost 47,000 jobs (nearly 44%). Atlas estimates almost $68 billion in investment (over 44% of the national total) and nearly 52,000 jobs (over 32% of the total). Each dataset concurs that these vital locations have accounted for more than two-fifths of clean transition investment since the passage of the IRA and at least one-third of the resulting jobs.
Photo Courtesy Hitachi Energy
In our next piece, we will take a closer look at the IRA impact on state and local levels.
