Over the weekend, President Joe Biden approved a deal to raise the ceiling on debt spending to avoid default on payments by the US.
The move avoided a potentially disastrous jolt to the country's economy and moves one step closer to enshrining energy efficiency and renewable energy spending in the Inflation Reduction Act as a cornerstone of U.S. economic policy moving forward.
Basically, the deal pours money into renewable energy (and the industries that will enable increased production), and energy efficiency. Plus, the development makes sense for the U.S. economy.
Looking at how these policies are reshaping the wallets of everyday Americans means examining the impacts of all of this funding on inflation and jobs.
Renewable energy spending in the U.S. does seem to reduce inflation. A new report from the Brookings Institute, a policy and finance think tank, revealed that recent surges in inflation were caused by supply chain shortages and rising energy prices.
Setting aside the fact that many of those supply chain shortages can be traced back to climate change (weather-related disasters that affect food production, shut down factories, damage property, and risk lives), the energy price shocks themselves are caused by the reliance on fossil fuels. The more the U.S. can decouple its demand from oil and gas, the lower those energy prices would be.
Second, the funding from the government has spurred an incredible boom in new manufacturing construction and production inside the U.S. (and primarily in states whose Congressional leadership has been most vocal about doing away with the government support helping to fuel that economic expansion).
There's a "green belt" of federal money outflows that stretches from the Great Plains through the Southeast, according to reporting from Bloomberg. And these funds will actually create more jobs than the energy industry would lose from a transition away from fossil fuels, according to a research report published in the journal Energy Policy.
As of February, the Inflation Reduction Act had already added over 100,000 jobs to the U.S. economy in just four months.
Last year, battery manufacturers committed to invest some $72 billion into new factories, according to data cited by Energy Monitor. In the last few months, international battery manufacturers committed to spending billions in Georgia, Tennessee, and North Carolina. While billions more will go to electric vehicle manufacturing facilities in Kentucky and other Southern states.
Spurred by the Inflation Reduction Act, U.S. EV investments in 2022 from Hyundai alone topped more than $10 billion in two Georgia factories – bringing in more than 11,000 new jobs, according to Energy Monitor.
That's just on the battery side of the equation.
Solar and wind turbine manufacturers are also getting a big boost from the Inflation Reduction Act and they're setting up multi-billion dollar plants as well.
The new debt deal wasn't a complete slam dunk since it enshrined new oil and gas infrastructure through pipeline deals and permitting reforms that will continue to perpetuate the U.S. fossil fuel problem.
But if the IRA's climate spending was able to weather the storm of a vocal attack from the Republicans who control the House of Representatives there's a good chance that it won't see its climate provisions rolled back anytime soon.