MEMORANDUM
To: Interested Parties
From: Deputy Secretary Wally Adeyemo
Date: August 16, 2023
Re: Inflation Reduction Act – Year 1
One year ago, Congress passed, and the President signed, the Inflation Reduction Act into law. This marked the single most significant legislation to combat climate change in American history and one of the largest investments into the American economy in a generation.
Already, the investments and our implementation have borne fruit: over the past year, the law has unleashed an investment and manufacturing boom in the United States unlike anything seen in decades. Companies have announced nearly 200 new projects totaling over $110 billion of investment in building America’s clean energy economy. Treasury analysis released this week points out these announced investments in clean energy, electric vehicles, and batteries are concentrated in communities with lower wages, lower college graduation rates, and lower employment rates.
According to one estimate, China has historically spent over $400 billion per year on industrial policy, largely through direct subsidies to firms and below-market credit to state-owned enterprises. Our strategy, by contrast, uses modest incentives to promote private investment. By doing so, the Inflation Reduction Act will unlock $3 trillion of investment in America for renewable energy technology.
While more productivity gains and long-term economic growth will come in years to follow, we already see progress in three key metrics:
- Creating good-paying jobs across the United States, especially in disadvantaged communities;
- Strengthening our energy security to build resilience to geopolitical risks and other potential economic shocks; and,
- Tackling climate change by accelerating the development, adoption, and deployment of clean energy technologies.
Creating Good-Paying Jobs
A central tenet of the Inflation Reduction Act is spurring job creation across the United States. These investments in clean energy are a prime example of Secretary Yellen’s modern supply-side economics framework—harnessing government action to promote growth while addressing climate change and inequality. Not only do these investments generate long-term economic growth for the whole country, but they also create jobs in disadvantaged communities.
Over the past twelve months, we’ve seen these investments start to translate to American jobs:
- The following 70-page list of investment announcements details the tens of thousands of jobs being created in communities across the country, from Colorado Springs to Minneapolis, Albuquerque to Toledo.
- The annual economic opportunity for workers in the wind and solar industries will grow by $220 billion per year in wages by 2035
- Moving forward, clean energy investments could support over 1.5 million clean energy jobs in the United States by 2030.
Strengthening Our Energy Security
Events of the past year – from climate emergencies and supply chain snarls to Russia’s weaponization of exports – have further demonstrated the acute need to invest in our energy security and transition. The Inflation Reduction Act equips us to do so by accelerating the development and deployment of clean energy, including key supply chains. Getting clean technologies to market faster, supported by reliable supply chains for essential components, is key to building a resilient energy sector, while also ensuring that lower energy costs for Americans are not dependent on unreliable geopolitical actors.
- Estimates suggest the Inflation Reduction Act can also help bring down the costs of certain emerging technologies by as much as 25 percent, and position America as the global leader in these areas.
- Analysts now expect twice as much wind, solar, and battery storage deployment over the next seven years compared to the base case without the law. One analysis found that the typical American household could save around $200 per year just on their electric bills.
- Households that take advantage of the electric vehicle incentives can save thousands per year on energy and fuel costs, as electric vehicle drivers will see their fuel costs go down by about 60 percent.
Tackling Climate Change
Curbing carbon emissions necessitates the development and adoption of clean energy. For too long, the United States has lagged in making the adequate investments needed to accelerate a clean energy transition. The incentives in the Inflation Reduction Act have positioned the United States to lead on clean energy and meet our goals.
- With the Inflation Reduction Act, the President’s 2030 emissions reduction goal is within reach. A slew of independent studies suggest the Inflation Reduction Act will drive significant emissions reductions.
- As the Inflation Reduction Act drives lower costs of emerging climate technologies, these technologies will be deployed globally, and eventually can reduce hundreds of millions of tons of emissions around the world each year.
- Increased deployment of clean energy and reduced particle pollution improve people’s day-to-day lives. For example, due to our investments, we can avoid thousands of premature deaths and asthma attacks.
These incentives and investments are, of course, part of our broader, whole-of-government approach to climate change. For instance, other policies like the Bipartisan Infrastructure Law and further steps to upgrade our electric grid infrastructure will all contribute to major climate progress in the years to come. These federal policies run in tandem and in partnership with state, local, and private-sector action and market forces.
Next Steps
In our first year of implementation, the Treasury Department has focused on achieving three goals: creating good-paying jobs, strengthening our energy security, and tackling the climate crisis. Our efforts have stretched across the Department, including the Office of Tax Policy, Climate Hub, Inflation Reduction Act Program Office, and the Office of the Deputy Assistant Secretary for Management and Budget. At the same time, the Treasury Department is working closely with the IRS to modernize the agency’s customer service and technology and ensure the Inflation Reduction Act’s clean energy tax incentives are delivered accurately and seamlessly.
The Treasury Department has prioritized the pieces of guidance that will provide maximum economic, energy security, and climate benefits. Treasury will complete the first phase of implementation in the coming weeks, having provided information or proposed guidance for the Investment and Production Tax Credits’ cross-cutting bonus provisions, as well as new credit monetization provisions that are a force multiplier for job creation and clean energy deployment. Treasury will announce plans for phase two of implementation in September.
At Treasury, we are focused on implementing the clean energy tax provisions as quickly as possible. On the day of the law’s enactment, Treasury issued guidance on the electric vehicle tax credit and worked to ensure consumers could easily find a list of eligible vehicles online. Since then, Treasury and the Internal Revenue Service have issued 38 pieces of guidance on the clean energy provisions, while engaging with hundreds of stakeholders and reviewing nearly 5,000 comments.
Clean Energy Investments Announced Since Passage of Inflation Reduction Act
August 10, 2023
Albuquerque, New Mexico
Maxeon Seeks to Spend $1.2 Billion Building Biggest US Solar Factory
Maxeon Solar Technologies Ltd. plans to spend $1.2 billion to build the biggest US factory for polysilicon solar panels, as President Joe Biden’s landmark climate legislation continues to boost domestic clean-energy manufacturing.
Construction on the plant in Albuquerque, New Mexico, is set to start in the first quarter with production expected to begin in 2025, the Singapore-based firm said Thursday in a statement. The facility will be able to produce as much as 3 gigawatts of solar cells and panels a year, doubling Maxeon’s manufacturing capacity. A gigawatt is enough to power about 173,000 American homes.
August 7, 2023
Las Vegas, Nevada
Solar parts manufacturer Unimacts plans to triple operations in Nevada
It’s been one year since the wide-ranging Inflation Reduction Act was passed, and a manufacturing company credits the legislation for its recently opened Las Vegas location.
Unimacts hired 80 people and opened a manufacturing facility that makes metal torque tubes in Las Vegas at the start of 2023 thanks to the Inflation Reduction Act or the IRA, CEO Matt Arnold said. The metal tubes allow solar panels to rotate during the day, boosting efficiency by about 10 percent.
“We wouldn’t be here without the IRA — full stop,” he said.
At its Las Vegas facility, located in the shadow of The Orleans, Unimacts can make enough torque tubes in a year to support two gigawatts worth of solar panels. But Arnold said the company is looking to triple the size of its operations in the near future to build enough capacity to support six gigawatts worth of solar panels and employ over 200 people.
August 2, 2023
Loudon, Tennessee
Hanon Systems bringing 600 new jobs to Loudon County
Six-hundred new jobs are coming to Loudon County. Governor Bill Lee and state economic development leaders announced that Hanon Systems will establish a new manufacturing presence in the county.
Hanon Systems is a leading supplier of thermal and energy management solutions for the automotive industry. The company employs more than 22,000 people across 21 countries and is headquartered in South Korea. Now, the company is coming to Tennessee.
According to the state, Hanon Systems is investing nearly $170 million to establish a new facility in Huntingdon Park in Loudon. Bradshaw added that the company will also have a competitive pay scale, and the TVA said the company will help attract and retain jobs in the area.
August 2, 2023
Kyle, Texas
XCharge NA’s New Texas Facility Boosts EV Charging Solutions
XCharge North America (NA) has announced the establishment of a 3,500 square foot manufacturing facility in the Greater San Marcos area, Texas, in the City of Kyle. This facility is aimed at conducting research, development, distribution, and services for its central electric vehicle (EV) charging solutions. In the pipeline is the company’s strategy to expand the facility to approximately 20,000 square feet in the upcoming years.
XCharge NA’s new facility holds great significance due to its potential to enhance the accessibility of local EVs. With merely 20 public-access Level-2 and DC Fast charging stations serving a population exceeding 68,000 within San Marcos city limits and surrounding counties, the company’s effort can greatly facilitate EV usage. Its plans align with the green initiatives set forth by the Biden Administration, as well as support local community initiatives and events, ultimately expanding job opportunities.
July 24, 2023
Colorado Springs, Colorado
Meyer Burger announces solar cell production facility in Colorado Springs
Another international business has chosen to call Southern Colorado home and looks to bring hundreds of jobs with it. Meyer Burger, a Switzerland-based company will open a high-performance solar cell manufacturing facility in Colorado Springs in 2024.
“Meyer Burger’s technologies are found in most solar modules produced worldwide, and their decision to land in Colorado Springs adds to our growing advanced manufacturing sector,” said Johnna Reeder Kleymeyer, President and CEO of the Colorado Springs Chamber & Economic Development Corporation (Chamber and EDC) explained. “The new Colorado Springs footprint will be Meyer Burger’s first site in the Western Hemisphere to manufacture the chips and wafers that power cutting-edge solar technology.”
Production at the Colorado Springs manufacturing plant is planned to start during the second half of 2024. Meyer Burger expects to create more than 350 jobs with an average annual wage of nearly $78,000.
July 24, 2023
Minneapolis-St. Paul, Minnesota
Canada’s Heliene plans new US solar panel and cell factory
July 24 (Reuters) - Canadian solar panel maker Heliene is planning a major expansion of its U.S. manufacturing operations with a new Minnesota factory that will produce both modules and cells, its chief executive told Reuters.
The company, which already makes panels in Iron Mountain, Minnesota and Ontario, Canada, is the latest to commit to new U.S. solar production since passage last year of President Joe Biden's Inflation Reduction Act, which incentivizes domestic manufacturing of clean energy equipment with tax credits for both producers and buyers.
Heliene, which is privately held, will spend about $145 million on the new facility, which will be in the Minneapolis-St. Paul area. It will have an annual capacity of about one gigawatt of modules and 1.5 gigawatts of cells, CEO Martin Pochtaruk said in an interview last week.
July 24, 2023
Location Not Yet Determined
Stellantis, Samsung SDI will team to build a second EV battery plant in the United States
Stellantis NV's third battery manufacturing plant in North America will be built with Korean battery partner Samsung SDI in the United States, the companies said Monday.
The exact location of the second plant under the existing StarPlus Energy joint venture wasn't disclosed with the announcement of a signed memorandum of understanding, whose execution is subject to definitive documentation. The facility is expected to begin production in 2027 with an initial annual production capacity of 34 gigawatt hours. A dollar amount wasn't shared.
June 26, 2023
Brownsville, Tennessee
Enchem America Inc. to Locate US Manufacturing Operations in Brownsville
Tennessee Gov. Bill Lee, Department of Economic and Community Development Commissioner Stuart McWhorter and Enchem America Inc. officials announced today the company will invest $152.5 million to establish electrolyte manufacturing operations in Brownsville, Tennessee. Located at the I-40 Advantage Industrial Park, a Select Tennessee Certified Site, the new facility will be Enchem’s second U.S. plant. The project will create 190 new jobs in Tier 4, At-Risk Haywood County. The Brownsville facility will operate similarly to Enchem’s U.S. headquarters in Commerce, Georgia, and will manufacture electrolytes for electric vehicle (EV) batteries as well as other EV battery-related services.
Enchem America Inc. is a subsidiary of Enchem Co., Ltd., which is based in South Korea. The company specializes in the development and manufacturing of electrolytes and other additives for rechargeable batteries. With the additional Tennessee operations, Enchem will be able to further support its EV partners across the Southeast.
June 23, 2023
Locust Grove, Georgia
Valdosta Today: Electric vehicle parts supplier to invest in new GA facility
[A]utomotive parts manufacturer NVH Korea will establish a new facility in Locust Grove. The project will create over 160 new jobs and bring $72 million in investment to Henry County…NVH Korea is an automotive parts manufacturer based in the City of Ulsan and established in 1984. The company specializes in automotive noise, vibration, and heat-control parts, which it currently produces in Korea, Europe, and India. The company also operates a manufacturing facility that produces floor mats, cargo mats, and cargo trays in Georgia. The new facility will supply battery parts for electric vehicles (EVs) in the United States for manufacturers such as Hyundai Mobis, Kia Georgia, and Hyundai Motor Group.
June 22, 2023
Brighton, Colorado
Solar manufacturer announces plans for Brighton location
Brighton will be home to a solar manufacturing facility along Interstate 76, the Polis administration announced June 22. The Colorado Office of Economic Development and International Trade announced today that VSK Energy Inc. will expand into Brighton, bringing as many as 900 new jobs to the area.
The company plans to move into the 76 Commerce Center, row of warehouses along Interstate 76 just north of Brighton’s 160th Avenue in 2024. The company would share the site with autonomous warehouse equipment manufacturer Outrider.
VSK Energy Inc., a U.S.-based joint venture between several international solar manufacturers, announced plans to invest $250 million to develop an American solar photovoltaic module manufacturing facility projected to create over 900 net new jobs.
For the full list of clean energy investments announced, click here.