Marking a victory for the Biden administration’s domestic agenda and the end of negotiation bottlenecks among Senate Democrats, the legislation earmarks a total of $369 billion to combat “the existential crisis of climate change,” according to recent remarks from Biden.
As the climate sector prepares for an influx of capital, research firm Morningstar Direct revealed that investors have already poured $425.5 million into renewable energy exchange-traded funds. In the entire month of July, investors placed $112.8 million into such assets.
Indeed, iShares’ Global Clean Energy ETF has risen 23% over the past month, while Invesco’s Global Clean Energy ETF has risen 22% over the same horizon.
A fact sheet from the office of Senate Majority Leader Chuck Schumer (D-NY) claimed that the Inflation Reduction Act will create 9 million jobs across the United States while bringing “manufacturing of clean technology like solar panels, wind turbines, batteries, and much more back to America.” Among other items, the legislation funds $160 billion in clean electricity tax credits, $43 billion in production tax credits, and $40 billion in tax credits to make buildings more energy efficient.
Yet the $7,500 tax credits for electric vehicle purchases — a key promise of the Biden administration — already appear to have backfired. Citing “significant material cost increases and other factors,” Ford announced that it would increase prices between $6,000 and $8,500 for its electric vehicle lineup as the legislation advanced through Congress. GM likewise increased the cost of its electric Hummer by $6,250 last month.
The price hikes appear to undermine White House officials’ argument that electric vehicle tax credits — combined with elevated gas prices — will accelerate renewable energy adoption in the United States. “The more pain we are all experiencing from the high price of gas, the more benefit there is for those who can access electric vehicles,” Transportation Secretary Pete Buttigieg argued before House Transportation and Infrastructure Committee members last month.
The national average price of gasoline was $2.38 per gallon when Biden assumed office, according to the Energy Information Administration, and increased to $3.53 per gallon by the start of the Russian invasion of Ukraine. Prices surpassed $5.00 per gallon in early June before subsiding to $3.96 per gallon as of Monday, according to AAA.
Energy Secretary Jennifer Granholm has nevertheless argued that “the only way” out of “boom-and-bust cycles” in energy prices is “deploying clean energy.”
“The real truth is that as long as our nation remains overly reliant on oil and fossil fuels, we will feel these price shocks again,” Granholm said at a June press briefing. “This is not going to be the last time. The next time there’s a war, the next time there’s a pandemic or another hurricane, these extreme weather events we are experiencing — they will impact the access that we have to fossil fuels.”
Indeed, Biden favors policies meant to promote green energy even as his administration canceled an oil and gas lease sale in Alaska and refused to greenlight the expansion of the Keystone XL Pipeline upon his entrance into office.