An independent study has revealed that the Inflation Reduction Act (IRA) will potentially grow the US economy by nearly $2tn over the next decade.
The report, commissioned by the American Clean Power Association (ACP) and conducted by ICF, analysed the economy-wide impacts of the IRA’s energy tax credits, finding that the law will incentivise significant investments, create millions of jobs and boost economic growth.
The benefits extend across the energy sector, positively impacting renewable resources, oil, gas, hydrogen, nuclear energy, and battery storage systems as well as the power sector, transportation, manufacturing and more.
Among the most significant impacts in the last two years is the substantial increase in domestic manufacturing of clean energy systems.
ACP is joined in support of the report findings by five organisations, including the US Chamber of Commerce, the Edison Electric Institute, the National Electrical Manufacturers Association, the National Hydropower Association and the Nuclear Energy Institute.
The study examines the IRA’s impact across various sectors, including power, transportation, buildings, sustainable aviation fuels, hydrogen and manufacturing.
The study found that the IRA will spur $3.8tn in net spending across the US economy, creating a fourfold return on taxpayer investment when considering both economic and emissions benefits.
The IRA will grow the US economy by $1.9tn, contributing to a stronger and more resilient economy.
The law is expected to create 13.7 million jobs over 10 years, providing a significant boost to the US labour market.
Investments resulting from the IRA will add $846bn to household income, improving the financial well-being of millions of Americans.
“The clean energy tax credits have significantly increased domestic energy production, revitalizing communities across the country and lowering consumer energy bills.
“By supporting our nation’s diverse array of energy resources, the IRA is strengthening our national security and enhancing economic competitiveness,” said ACP chief executive Jason Grumet.
“With energy demand skyrocketing, the American energy industry must rise together to provide electricity that is affordable, reliable, and clean. Simply put, consistent federal policy is essential to American power.”
“These provisions are catalyzing tremendous private sector investment in new manufacturing and energy infrastructure that will keep our economy competitive for decades to come and ensure the U.S. leads the world developing technologies to bolster energy security, while also reducing emissions,” said Marty Durbin, Senior Vice President for Policy at the U.S. Chamber of Commerce.
“NHA applauds American Clean Power Association and ICF for conducting this study, which confirms the immense benefits and opportunities for water power that are found in the Inflation Reduction Act.
“In our industry alone, this landmark law helps incentivize capacity additions at existing hydropower projects, new pumped storage projects, marine energy and adding generation to existing non-powered dams.
“These opportunities amount to billions of dollars in potential investments for water power.
“NHA is committed to working with the incoming administration and Congress to keep the IRA in place and make improvements to ensure that existing baseload resources at risk of premature license surrender also receive federal support.
“Our industry is confident that this law can help water power play a key role in implementing an all-of-the-above American energy strategy that keeps rates low and the lights on,” said Malcolm Woolf, President and CEO of NHA.