Investments in clean energy and semiconductor manufacturing projects in the US are largely taking place in Republican-controlled areas, despite Republican opposition to President Joe Biden’s climate legislation. According to an analysis by the Financial Times, over 80% of investments in these sectors since the approval of the Inflation Reduction Act (IRA) and the Chips and Science Act last year are targeted at Republican congressional districts.
President Biden has made green investment and job creation central to his re-election campaign, while highlighting Republican resistance to the legislation that has sparked the spending spree. Despite this opposition, Republican states like Georgia, South Carolina, and Ohio have received significant corporate pledges.
The IRA and Chips Act, which include over $400 billion in tax credits, grants, and loans, aim to reindustrialize the United States and decarbonize the economy. The success of Republican districts in attracting investment can be attributed to factors such as available land and cheap labor, as well as the implementation of strong tax breaks and subsidies.
While Republican lawmakers continue to criticize federal spending on clean energy, they also compete for IRA-related investments in their respective states. This dominance of Republican districts in securing investment presents a challenge for President Biden as he seeks to take credit for job creation and projects, especially considering his low approval ratings.
President Biden has been touring manufacturing sites across the country to promote his business strategy, known as “Bidenomics,” which advocates for government funding to stimulate private-sector investment and build a national supply chain. However, his message has struggled to resonate with voters, and his approval ratings have been hampered by persistent inflation concerns.
To gain credit for the surge in investment and jobs, President Biden will need to refine his messaging and better communicate the benefits of the IRA and clean energy tax credits. Republican lawmakers need to find a way to reconcile their opposition to federal spending on clean energy with their desire to attract investments and jobs to their states.
In addition to manufacturing, Republican states are also leaders in clean energy distribution. Texas, Oklahoma, and Florida, for example, ranked among the top states for clean energy installations last year.
With the future of the IRA uncertain, companies like Nel Hydrogen are closely watching developments. The Norwegian company recently announced a $400 million manufacturing investment in Michigan and views the North American market as crucial. However, if the IRA is repealed, they may need to consider alternative locations.
In conclusion, despite Republican resistance to climate legislation, Republican-controlled areas in the US are benefitting from significant investments in clean energy and semiconductor manufacturing projects. This poses a challenge for President Biden as he seeks to take credit for job creation and projects while facing low approval ratings. Republican lawmakers, on the other hand, must reconcile their opposition to federal spending on clean energy with their desire to attract investments and jobs to their states. The future of the IRA remains uncertain, leaving companies uncertain about the market’s direction. The dominance of Republican districts in securing investment highlights the complexities of US climate policy and the need for clear communication and messaging from all sides.
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Republican-controlled areas of the US are dominating a wave of investment in clean-tech projects as President Joe Biden urges opponents to “claim credit” for the jobs boom despite their efforts to block his historic climate legislation last year.
More than 80% of investments in large-scale clean energy and semiconductor manufacturing committed since last year’s approval of the Inflation Reduction Act and the Chips and Science Act is targeted at Republican congressional districts, according to an analysis by the Financial Times.
The president has placed the green investment boom and job creation at the heart of his bid for re-election in 2024, while emphasizing Republican opposition to the legislation that has sparked the spending spree. Although the Chips Act received some Republican support in Congress, no party member voted for the IRA.
“That hasn’t stopped them from claiming credit for the billions of dollars and thousands of jobs that are coming to their states,” Biden he told a crowd Wednesday at a new wind tower factory in New Mexico. “We’ll see them at the opening.”
The FT has tracked more than 110 projects worth at least $100 million announced since the two pieces of legislation passed last August, promising to create 100,000 jobs. Republican states like Georgia, South Carolina, and Ohio are among the top in corporate pledges.
The IRA and Chips Act together include more than $400 billion in tax credits, grants and loans designed to reindustrialize the heartland of the United States and decarbonise the world’s largest economy.
“This is the biggest transition you will see in your life,” said Andrés Gluski, chief executive officer of AES, one of the largest utility developers in the world. “Some politicians may have spoken out, but they will be big winners.”
The president was keen to point out cases of red districts benefiting from clean investment despite opposition from their lawmakers to his climate agenda.
On Wednesday, he cited a new project by CS Wind, a South Korean manufacturer, which broke ground in April to expand its wind tower facility in Pueblo, Colorado, already the largest in the world. Biden pointed out that the plant is in the congressional district of GOP firebrand Lauren Boebert, “that very quiet Republican lady.”
“He railed against his pass,” he said Wednesday. “But that’s okay—she’s welcoming him now.”
Biden made similar shots at Republican Congresswoman Marjorie Taylor Greene and Senator Lindsey Graham during a tour of a new solar inverter plant in South Carolina last month. Both MPs represent constituencies at the forefront of a cleantech manufacturing boom, with the Greene Borough hosting the the largest investment in the solar supply chain since the passage of the IRA.
The Republicans’ success in attracting investment is partly because their districts often have large areas of available land and cheap labor, but states like Georgia and Ohio have also implemented their own strong tax breaks and subsidies to attract developers, including through roadshows in Europe and Asia.
“These companies, no matter which state they choose, can get those federal benefits. So they come to us and say, ‘What can you do for us at the state level?’” said Andrew Deye, vice president of strategy at JobsOhio, the state’s economic development arm.
Ohio attracted a number of cleantech projects last year, including a $4.4 billion battery plant by Honda and LG Energy Solution that received more than $300 million in stimuli from JobsOhio and the state government .
Investor interest in GOP-controlled districts poses a growing conundrum to Republican lawmakers as they attack federal spending on clean energy, even as lawmakers and governors in red states continue to compete for IRA-related investments.
“The Democrats’ Inflation Reduction Act has put Americans in a bind for subsidies to big corporations and big banks,” Republican Congressman Jason Smith, chairman of the House Ways and Means Committee, said in June after he approved a bill of law that would have canceled the IRA. “We’re eliminating the Democrats’ worst special-interest handouts for the rich.”
But the dominance of Republican districts in securing investment also underscores the uphill battle Biden faces as he tries to take credit for jobs and projects amidst consistently low approval ratings.
He was in New Mexico as part of a nationwide tour of manufacturing sites to publicize “Bidenomics,” its business strategy that promotes government funding to spur private-sector investment and build a national supply chain.
But the message has struggled to win over voters, with the president’s approval ratings languishing amid persistently high inflation. A Washington Post and the University of Maryland survey in July he found that more than half of US voters frown on his climate actions and are unaware of the IRA’s clean energy tax credits.
“The competition will be who can take credit for the surge in new investment and new jobs,” said Sasha Mackler, energy program manager at the Bipartisan Policy Center. “The Inflation Reduction Act is probably the largest federal investment and climate action in the nation’s history. . .[Biden]he has a lot to work on and really needs to find a way to clarify that message.
In addition to manufacturing, Republican states are also leaders in clean energy distribution, with Texas, Oklahoma and Florida among the top Upper states for installations last year, according to the American Clean Power Association, a clean energy industry lobbying group.
“Fingers crossed [the IRA] it will not be repealed,” said Håkon Volldal, chief executive officer of Nel Hydrogen, a Norwegian company that announced a $400 million manufacturing investment in Michigan in May.
“The whole purpose of building that plant in Michigan is because we believe North America is going to be a very important market. . . If not, then we must look elsewhere.”
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