The United States is experiencing a green energy revolution, that is evident in sectors from solar to nuclear, carbon capture to green hydrogen, and aims to rejuvenate the country’s rust belt, decarbonize the world’s biggest economy, and wrest control of the 21st-century’s energy supply chains from China. The world is just beginning to contend with what it means. Less than three years ago, the US had abandoned the Paris agreement on climate change and then-President Donald Trump touted an era of American energy dominance based on the country’s fossil fuel abundance. However, President Joe Biden has passed sweeping legislation to reverse course. Last year’s Inflation Reduction Act, and its hundreds of billions of dollars in cleantech subsidies, are intended to spur private-sector investment and accelerate the country’s decarbonization effort.
The tax incentives have made the US attractive to investors, say cleantech developers, and are diverting money away from other countries. Since the passage of the IRA last year, $90bn of capital has already been committed to new projects, according to Climate Power, an advocacy group. David Scaysbrook, managing partner of Quinbrook Infrastructure Partners, a global cleantech private equity group, says that “the US is now the most opportunity rich, most aggressive growth, most prolific market for renewables investment in the world today and will be for quite some time.”
However, the scale of state intervention has raised concerns about protectionism and alarmed allies, even those who once implored the US to rejoin the global climate fight. France’s President Emmanuel Macron says that the IRA could “fragment the west,” and Ursula von der Leyen, the European Commission’s president, has complained it would bring “unfair competition” and “close markets”.
Moreover, the effort to break dependence on cheap Asian components that have sped the advance of renewables in recent years has left many analysts skeptical. It is uncertain whether the US can reset the global energy order, create high-paying cleantech jobs at home, and reduce emissions all at the same time. Daniel Liu, an analyst at Wood Mackenzie, says that “there has to be some level of collaboration because no country can do it alone.”
