What is going on here?
The US renewable energy sector is struggling to grow as much as hoped in the aftermath of the Inflation Reduction Act (IRA) – President Biden’s landmark bill to increase growth in clean energy for the United States.
What does this mean?
Earlier this month, Ørsted – the world’s largest offshore wind developer – scrapped two projects in the US that were planned for the New Jersey coast. Ørsted, BP, and Equinor, have collectively abandoned USD$4.8 billion of offshore wind projects since late September.
Further, US carmakers Ford, General Motors, and Tesla are all pausing planned manufacturing expansion of electric vehicles. Even more, a hallmark carbon capture and storage project by the company Navigator CO2 Ventures, was cancelled late last month.
The pull-back and cancellation of these projects all share common reasons. Companies claim that rising inflation, supply chain challenges, and increasing project costs are key reasons why they had to abandon the planned developments.
Why should we care?
Many analysts and market experts are needing to rethink their predictions about how fast the US will be able to reduce emissions due to the impact of the Inflation Reduction Act (IRA). The Biden administration has set ambitious climate goals (for the United States) and supported these goals with subsidies embedded in the IRA.
However, the combined wider struggles of these large, expensive projects are putting up quite the road block. From the cost of materials and services surging due to inflation, supply-chain delays, and the high cost of raising or borrowing money due to rising interest rates – the road ahead is filled with bumps.
But all is not lost! While the US may be in for a bumpy ride – globally, renewable energy investment is up 25% from 2022.
- Wonder what renewable energy projects might be growing in your neighbourhood? Check out this resource from the Department of Energy!
- Contact your energy provider to make the switch to renewable energy! Each provider is different but most offer programs so make sure you check out your options (like this one offered by ConED in New York!
- Don’t forget to register to vote! The passage of bills like the Inflation Reduction Act only helps smooth the road ahead.
Featured image by Matt Bango, via Stocksnap.