Government Shutdown Could Slow Down U.S. Clean Energy Rollout

A government shutdown could slow down U.S. clean energy investments as it could delay billions of dollars worth of incentives under the Inflation Reduction Act (IRA) for which the Administration is still fine-tuning the details, according to senior White House adviser John Podesta.

The IRA, passed in August last year, has nearly $370 billion in climate and clean energy provisions, including investment and production credits for solar, wind, energy storage, critical minerals, funding for energy research, and credits for clean energy technology manufacturing such as wind turbines and solar panels.

However, many developers and manufacturers are still waiting for guidance on which specific technologies – including in the hydrogen and low-carbon fuels industries – would qualify for tax credits under the IRA.

In case of a government shutdown – which is just five days away if Congress doesn’t reach a compromise deal – the agencies expected to clarify the tax credit provisions in President Joe Biden’s climate law would stop working and slow down all processes further down the road.

“It will be a huge problem” if the government shuts down, Podesta, Senior Advisor to the President for Clean Energy Innovation and Implementation, said on Tuesday, as carried by Bloomberg.

“That means we can’t do critical tasks like Treasury getting the guidance out that is really important,” the adviser added.

As of early Wednesday, the U.S. Congress continued to be divided on ways to prevent a government shutdown as Republicans and Democrats were still at odds about federal funding.

If a shutdown is not prevented, the U.S. could lose the momentum in clean energy deployment, just as the IRA has spurred a land rush for development sites and gave impetus to clean energy equipment manufacturing in the United States.  

Despite supply-chain and tariff challenges unrelated to the IRA and despite the fact that developers are still waiting for clarity on some of the IRA provisions, the benefits of the landmark climate law have started to manifest themselves, clean energy associations say.

By Tsvetana Paraskova for Oilprice.com

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