Biplab Das 
A year after the passage of the largest climate change legislation in U.S. history, challenges are mounting for President Joe Biden’s clean energy agenda. Despite the ambitious goals set by the landmark Inflation Reduction Act (IRA), economic realities such as soaring financing and materials costs, unreliable supply chains, delayed rulemaking, and sluggish permitting processes are creating hurdles for clean energy development in the United States.
Project setbacks across industries
The repercussions are widespread, ranging from the cancellation of offshore wind projects by Orsted in the U.S. Northeast to scaled-back electric vehicle (EV) manufacturing plans by major automakers like Tesla, Ford, and GM. The darkening outlook for clean energy industries poses a significant challenge for Biden, who aims to achieve a net-zero economy by 2050.
Clean energy targets face obstacles
Clean energy experts suggest that the setbacks will make it increasingly difficult for the United States to reach its ambitious targets to decarbonize by mid-century. Issues such as rising costs, broken supply chains, and delays in various projects are impacting the growth path required to meet the set targets. The U.S. had showcased the IRA as evidence of unprecedented progress in the fight against climate change during the United Nations climate summit in Egypt last year.
Analysis of clean power projects
According to an analysis by the American Clean Power Association (ACP), more than 56 gigawatts of clean power projects, sufficient to power nearly 10 million homes, have been delayed since late 2021. Solar energy facilities, accounting for two-thirds of the delays, face challenges due to U.S. import restrictions and issues related to forced labor in the supply chain dominated by Chinese goods.
Permitting challenges and price increases
Issues such as permitting gridlock, local disputes over project sites, and a lengthy grid connection process contribute to the challenges faced by developers. Tight supplies and strong demand have driven up contract prices, potentially leading to higher costs for consumers. Solar contract prices, for instance, rose 4% to hit $50/MWh for the first time in the third quarter.
Assurance from the White House
Despite the setbacks, a White House official emphasized that there have been examples of progress, citing the expanding EV market and Dominion Energy’s progress on the nation’s largest offshore wind farm off the coast of Virginia. The official acknowledged macroeconomic setbacks but highlighted the resilience in the trajectory towards achieving climate goals.
Impact on offshore wind industry
The nascent U.S. offshore wind industry is facing turmoil, with developers seeking to renegotiate or cancel contracts due to rising costs. The Biden administration’s target of deploying 30 gigawatts of offshore wind by 2030 is now viewed as widely unattainable. Players in the industry have faced challenges, leading to multi-billion dollar writedowns on projects and a lackluster federal sale of wind leases in the Gulf of Mexico.
Waiting on treasury department rules
Some corporations are delaying investment decisions while awaiting rules from the Treasury Department on how the IRA’s tax credits can be utilized. For example, companies like POET are waiting for the design of tax credits for sustainable aviation fuel to determine whether the fuel can qualify as a feedstock.
Mixed reactions and recognition
While acknowledging the challenges, some industry leaders express confidence that progress is happening, albeit more slowly than anticipated. Critics argue that the IRA may not be sufficient to address issues such as permitting and approvals required for infrastructure development. Despite the hurdles, the U.S. is recognized for its efforts to tackle climate change, particularly compared to previous administrations.
The landscape for clean energy development in the United States presents a complex scenario, with economic realities testing the feasibility of ambitious targets and legislative efforts. The ups and downs in clean energy deployment are viewed as part of the normal course of development, but the challenges emphasize the need for continued adaptation and innovation in the clean energy sector.
