One year after the enactment of the largest climate change legislation in the United States, aimed at igniting a surge in American clean energy development, economic hurdles are casting shadows on President Joe Biden’s ambitious agenda.
The landscape for clean energy industries appears increasingly bleak as canceled offshore wind projects, jeopardized solar factories, and dwindling demand for electric vehicles (EVs) ripple through the economic realm, Reuters news report said.
Escalating financing and materials costs, fragile supply chains, delayed regulatory actions in Washington, and sluggish permitting processes have wreaked havoc. From Orsted’s project cancellations in the U.S. Northeast to scaled-back EV manufacturing plans by Tesla, Ford, and GM, the repercussions of these challenges are palpable.
The current outlook poses challenges for Biden’s commitment to achieve a net-zero economy by 2050, with the billions in tax credits outlined in the landmark Inflation Reduction Act (IRA) proving insufficient to mitigate the mounting obstacles.
The setback in the clean energy sector is particularly worrisome for Biden, who, after heralding the IRA as a monumental stride in combating climate change during last year’s United Nations climate summit, is expected to bypass this year’s event in Dubai. Dire warnings regarding the world’s slow progress in averting the worst consequences of global warming accompany Biden’s absence.
Experts in the clean energy domain suggest that the mounting setbacks will render the United States’ ambitious mid-century decarbonization targets increasingly challenging to achieve. John Hensley, vice president of the American Clean Power Association (ACP), emphasized the gap between deployment levels and the required targets.
The challenges, including disrupted supply chains and soaring costs, aren’t confined to the United States. Wood Mackenzie notes that no major nation is on track to meet the emissions reduction goals outlined in the Paris accord, aiming to limit global warming to 1.5 degrees Celsius.
Responding to the setbacks, White House officials acknowledged macroeconomic hurdles and local-level bottlenecks in renewable energy deployment. Despite these challenges, they pointed to progress in the expanding EV market and Dominion Energy Inc’s strides in establishing the nation’s largest offshore wind farm off Virginia’s coast.
However, disruptions persist. Over 56 gigawatts of clean power projects, sufficient to power nearly 10 million homes, have been delayed since late 2021, primarily in solar energy facilities. Import restrictions and challenges in the supply chain dominated by Chinese goods contribute to these delays.
The IRA seeks to incentivize domestic clean energy equipment production, yet the influx of new Asian capacity threatens the viability of planned American factories. Turmoil in the U.S. offshore wind industry adds to the setbacks, casting doubt on the feasibility of deploying 30 gigawatts of offshore wind by 2030.
Corporations await Treasury Department rules on how IRA tax credits can be utilized, delaying investment decisions across industries. Despite these hurdles, experts emphasize that the U.S. is making significant strides in tackling climate change, contrasting the earlier efforts of the Trump administration to roll back climate protection policies.
While challenges persist, experts maintain that these are part of the usual fluctuations in clean energy development. Amidst setbacks, they suggest that the U.S. can take pride in its ongoing efforts to combat climate change as it navigates the complex path towards a sustainable future.