Green transition is stitched into the tax code: White House economist

White House Council of Economic Advisers Chair Lael Brainard dismissed the notion that Republicans would be able to easily reverse the sustainable energy provisions passed in the 2022 Inflation Reduction Act (IRA) even if they win majorities in the general election this fall.

By building the energy transition into the tax code and incentivizing businesses and households to change their behaviors rather than compelling them to do so with more top-down spending initiatives, the Inflation Reduction Act is insulated from any quick-and-dirty policy corrections that may be desired by a new Congress or presidential administration, Brainard argued Friday.

“This is now the tax code,” Brainard said, speaking at an event in Washington. “These rules are complex, they take a very long time to write, and they take a very long time to amend.”

“These transformative projects [are] in communities all around the country,” she added.

The IRA contained a bevy of clean energy tax credits and deductions that are being implemented by the IRS.

For households, these include credits extending through 2032 for 30 percent of the cost of solar electricity products, fuel cells, wind turbines, and battery storage units. Similar credits for energy efficiency upgrades are available for windows, exterior doors, insulation materials and home electric vehicle chargers.

For businesses, credits are available for clean manufacturing investment and production, electric vehicles, biodiesel and alternative fuels, nuclear power production and carbon sequestration, among many other technologies.

Manufacturing investments were already on the rise prior to the IRA’s passage but skyrocketed directly thereafter, rising to more than $220 billion on a seasonally adjusted basis in March after hovering around an $80-billion level between 2015 and 2021.

“There’s a lot of momentum and a lot of excitement  behind the factories and the transformation of the grid that is going on all over the country,” Brainard said.

Despite steadfast Republican opposition to the Inflation Reduction Act, numerous Republicans have been cheering the investments the law has spurred in local and regional economies.

Rep. Andy Biggs (R-Ariz.) celebrated the construction of a battery plant in Queen Creek, Arizona, incentivized by the IRA.

“Some fantastic news for the state of Arizona,” Biggs wrote on social media last year. “Queen Creek is set to become the new home for a high-tech battery manufacturing facility. The company, LG Energy Solution, expects to employ thousands of people and will help us unleash American energy.”

Rep. Mark Green (R-Tenn.) also took to social media last September to praise the construction of an electric vehicle battery plant expansion in Cumberland City, Tennessee, another project cited by the Treasury as being boosted by the IRA.

“Honored to join [the Tennessee Department of Economic and Community Development] in welcoming Daejin Advanced Materials to Cumberland City! Daejin specializes in the manufacturing of polymers for the electric vehicle battery industry. This $10 million expansion will create 83 new jobs in [Tennessee’s 7th district]. Welcome, Daejin!”