Advanced Energy Perspectives

Every year, on the first Wednesday of October, we celebrate the low-profile powerhouse of the advanced energy sector: energy efficiency. The annual Energy Efficiency Day (#EEDay2022 on social media) serves as a reminder that efficiency upgrades – however big or small – work year-round to lower bills, improve grid efficiency, enhance the resilience of our communities, reduce reliance on fossil fuel energy, and create local jobs. Energy efficiency touches everyone in their homes, at their jobs, and in their schools, and will become ever more important as we upgrade our transportation and buildings to high-performing, clean technologies like electric cars and heat pumps. Efficiency is also key for keeping us cool during extreme heat and warm during severe cold without straining the grid or our pocketbooks. Now, there’s more reason than ever to cash in on the value of energy efficiency, thanks to landmark legislation passed by Congress.

AEE’s Leah Rubin Shen, Nat Kreamer, and Jeff Dennis on the White House South Lawn.

Yesterday, the White House held a celebration of the Inflation Reduction Act (IRA), the largest clean energy and climate investment in U.S. history. The bill marks a turning point in the transition away from fossil fuels to the clean energy technologies that will replace them and will pack a tangible boost for America’s economy. That gives our industry a lot to celebrate, and on this day, AEE made the most of it.

Labor Day 2022 is like none other for the advanced energy industry. It arrives after two years of COVID-related retrenchment and recovery and nearly a year of policy upheaval at the federal level, with threats of solar trade restrictions and climate and clean energy legislation seemingly stalled. Then, last month, came the Inflation Reduction Act which, when combined with the smaller but, in retrospect, complementary Infrastructure Investment and Jobs Act a year earlier, provides $444 billion for investment in advanced energy. That direct investment of federal dollars will, we estimate, attract $1.2 trillion in private investment, for a total boost of $2.8 trillion for the U.S. economy. And that means one more big thing: jobs.

On Tuesday, President Biden signed the Inflation Reduction Act (IRA), the most significant legislation ever enacted to advance clean energy, electrify transportation, and combat climate change. That much has been well established. What’s been underappreciated is just how transformational the IRA could be. Akin to the industrial policies of earlier eras, it has the potential to reshape the U.S. economy. Employing tax incentives, grants, loans, and innovative financial tools, the IRA, when combined with the Infrastructure Investment and Jobs Act passed last year, will leverage billions in public capital to catalyze trillions in private investment and total economic impact. In so doing, it is poised to rapidly expand domestic markets for advanced energy and transportation technologies, revitalize American manufacturing, and reshape how we produce and use electricity. In other words, as industrial policy for an advanced energy economy, the whole of IRA is greater than the sum of its parts.

On June 6, in response to skyrocketing oil and natural gas prices – an effect of Russia’s invasion of Ukraine – President Biden took a pair of bold steps to kickstart U.S. production of secure, clean, reliable, affordable energy. Now the Administration and Congress need to follow through, ensuring the government’s deeds live up to the President’s words, and the near-term boost leads to permanent production capacity and manufacturing jobs.