The federal government invested an estimated $34 billion in clean energy and transportation technologies in the last fiscal year through tax credits, grants, and loans, according to a recent report from Politico Pro. However, the investment only tells part of the story of how much money has poured into these technologies since the 2022 passage of the Inflation Reduction Act (IRA), the landmark bill that aims to drastically reduce carbon emissions this decade.
Politico, citing modeling data from the Rhodium Group and MIT’s Center for Energy and Environmental Policy Research, reported in February that the U.S. government’s investments span manufacturing, electricity generation, and electric vehicles (EVs). “Only a fraction” of the public outlay went to emerging technologies such as carbon capture and storage, sustainable aviation fuels, and clean hydrogen. However, private sector investments in these technologies are growing at a very rapid rate.
Photo Courtesy Rhodium Group
According to the Rhodium-MIT report, total public/private U.S. investments in clean energy and transportation totaled $239 billion in 2023, a gain of 38% from the previous year.
Those totals included a record $67 billion in the 2023 fourth quarter — up 40% from the same period in 2022.
Nearly all of the federal investment came in the form of tax credits, the Rhodium-MIT analysis found. About $5.5 billion went to manufacturing, with much coming in the form of advanced manufacturing tax credits under the IRA. Another $13 billion went to clean electricity generation, Politico reported. Only a tiny portion — about $0.3 billion — was used to support clean hydrogen and other emerging climate technologies.
More than $8 billion of tax credits went to households to install distributed clean electricity generation, storage systems, or heat pumps. An estimated $6.2 billion went to households and businesses for EV purchases.
A report from Grist, published in March 2024, found that in the 12 months ending in September 2023, about $220 billion “poured into everything from battery factories to solar farms.” Grist, also citing the Rhodium-MIT research, noted that the size of clean energy investments showed what can be achieved with “ a clear commitment to a specific course of action.”
Photo Courtesy Rhodium Group
“It’s proving the value of the federal government taking the lead, putting in place policy that says, ‘This is the direction that we’re headed: supporting decarbonization, supporting clean energy,’” Hannah Hess, an associate director of climate and energy at Rhodium Group who co-authored the report, told Grist.
In 2023, the clean economy sector “logged new records for yet another year,” according to Grist. Utility-scale solar and storage grew by more than half compared with 2022 to a total of $53 billion.
Investments across the EV supply chain more than doubled to $42 billion, while retail spending by businesses and households on items such as EVs, heat pumps, and solar arrays reached $118 billion.
Photo Courtesy Rhodium Group
While these investments have helped move the United States in the right direction in terms of clean energy growth, some experts say more must be done if the country is to meet all of its climate goals. One of those experts is Catherine Wolfram, a professor of energy economics at MIT, who told Grist, “We have more work to do” to accelerate clean energy growth.
However, as Grist noted, Wolfram also considers the IRA a “big win” in terms of federal lawmakers and private stakeholders making a firm commitment to positive climate action.
