The US clean energy sector will receive more than $500bn in taxpayer money over the next decade but transitioning from fossil fuels will require far greater sums of investment capital from the private sector, John Podesta, the White House senior clean energy adviser, told an industry conference.
“We need trillions literally every year over the next decade to make the clean energy transition happen at the pace and scale that climate science demands,” he said.
By comparison, cumulative US clean power project investment is about $1.45trn, most of it in the last 20 years, according to the American Clean Power Association (ACP), a national trade group based in Washington, DC.
President Joe Biden’s ambitious climate agenda includes targets to reduce US greenhouse gas emissions 50-52% by 2030 from 2005 levels and achieve a carbon-free electric grid by 2035.
Podesta, who is overseeing implementation of the Inflation Reduction Act (IRA), argued the federal government had “finally created conditions for energy and economic transformation” with the nation’s landmark climate law signed by President Joe Biden last August.
“The clean energy transition will be government enabled but private sector led,” he told ACP’s Cleanpower 2023 conference in New Orleans. “You’re going to deploy the capital, build the businesses, and create the good jobs.”
Podesta added: “We need you to simply take advantage of the tax credits in the IRA like many of you are already doing. Those credits create the best environment for clean energy we have ever seen.”
He reminded his audience of mostly project developers and lenders, and battery storage, solar, and wind supply chain company executives, that the industry no longer must hedge investment decisions to await potential short-term extensions of federal tax credits at the end of each calendar year.
Now you can make longer-term decisions.
“Now you can make longer-term decisions,” he said, claiming: “There has never been a better time for clean energy in America.”
The White House has said the IRA includes about $370bn in clean energy tax credits and federal climate-related spending over 10 years, although projects will be able to tap them into the early 2040s in some cases. That will raise the ultimate cost to $1-2.5trn, depending on how many projects qualify for the credits, which are not capped, according to some private estimates.
Podesta said his latest numbers show that since Biden took office in January 2021, there have been more than $230bn in new clean energy investment announcements from the private sector. This includes over $100bn since Congress passed the IRA on a party line vote by majority Democrats.
The Biden administration is optimistic that private sector ideas, investment, and support will enable the US to build its own manufacturing supply chain that will underpin the country’s clean energy transition, freeing it from dependence on China for battery and solar components, materials, and finished products.
“We’ve got to reduce our reliance on China,” he said, citing the lesson Europe “learned the hard way” with fossil fuels by becoming supply dependent on Russia, which left it vulnerable to price shocks and manipulation by Vladimir Putin. He called Putin a “dictator.”
“If we are not careful, we can see the same thing happen in the clean energy economy,” he said.
