IRA and inflection reduction
Inflation Reduction Act from the Perspective of a Lifelong Republican
I first entered the US renewable business in 1992 when I took a job as a Vice President of the wind power company KENETECH/US Windpower. I had a front row seat as the Energy Policy Act of 1992, a G HW Bush energy policy, came to include the first federal production tax credit for wind, and the wind industry in the US was born. The problem with the wind tax credit was while it proved very effective, it expired and need to be reauthorized with regularity. And the tax credit laps periods lead to industry crashs. I had my own cameo appearance in the decades of PTC drama in 2006 and helped get the PTC extension included in the Health Care Act of 2006 thanks to some heavy lifting by Charlie Rangel (at least the way I tell the story). In 2015, the Congress was growing weary of constant need to reauthorize this tax credit, and industry made a deal with the devil that had the PTC for wind phase out and then expire.
At the same time on the solar side, the Investment Tax Credit for solar that was enacted in 2006 by GW Bush, and was set to phase down.
These two tax credits drove tremendous development and construction of wind and solar in the US the financial benefits of which far exceeded the “cost” of the subsidies.
What the IRA does is extend these credits for the foreseeable future. This will further drive down costs as the industry can do planning not otherwise available.
After being in the wind and solar sector for now 30 years, I feel our sector is on a safe and sound footing really for the first time.
I’m not sure how support for renewables that included a series of policies implemented by Bush 41 and Bush 43, and whose projects are largely in republican districts, morphed into a policy supported by only democrats at the federal level at least.
Looking forward, America needs more power plants - 150 GW of US coal is over 40 years old. Wind and solar projects take about a year to three to develop and a year to build; gas fired power plants take three to four years plus two years, and coal and nuclear are not feasibly developed and constructed in under ten years. Unfortunately, there are a large number of power plants retiring in the near future that are at the end of their useful lives. We need wind, solar, and gas to fill this gap quickly.
Oddly enough if we can actually build more wind and solar in America - power prices will actually go down, and the IRA will actually induce the articulated outcome - reduced inflation!
Hopefully grass roots republicans and democrats can come together and crate local environments where we can build projects now that the federal framework is supportive for the long term. This doesn’t mean more spending – it means cooperation for specific project permits, approvals, local regulation and property tax structures that are pro-growth.