One Year Later: How the IRA and Chips Act Have Been Driving Green Investments

Key takeaways

The IRA and Chips Act are two landmark pieces of legislation that have spurred a surge of activity in the cleantech and semiconductor sectors, catalysing investment, innovation and job creation.

Among the beneficiaries, several companies stand out for their commitment to driving the green transition: First Solar, Fluence, and AECOM.

However challenges remain, such as a shortage of skilled workers, material constraints and lengthy construction lead times.

In an era defined by the urgent need to combat climate change and foster sustainable development, legislative initiatives are emerging as crucial catalysts for change. One such pivotal moment came with the signing of the Inflation Reduction Act (IRA) and the Chips Act into law by President Joe Biden in August 2022. As we commemorate the first anniversary of these groundbreaking acts, it’s an opportune time to assess their impact and highlight the strides made in driving green transition, as well as acknowledge the companies reaping the benefits.

The IRA and Chips Act: A Blueprint for Progress

The IRA and the Chips Act have emerged as beacons of hope in the fight against climate change and the pursuit of technological advancement. The IRA, boasting a staggering allocation of $USD 369 billion¹, stands as a testament to the government’s commitment to climate spending and energy security. Through tax credits, grants and loan guarantees, the IRA extends support across a spectrum of clean energy sectors, from well-established domains like wind, solar and electric vehicles (EVs) to emerging frontiers like carbon capture and low carbon hydrogen.

The Chips Act, while equally transformative, is focused on a different facet of progress—the semiconductor industry. The act seeks to bolster the domestic semiconductor supply chain, recognising its significance for technological innovation and national security. By investing in semiconductor research and development, the Chips Act ensures the United States remains competitive in the global technology landscape.

A Year of Milestones: Celebrating Successes

As we mark the first anniversary of the IRA and Chips Act, the impact is undeniable. These legislations have spurred a surge of activity in the cleantech and semiconductor sectors, catalysing investment, innovation and job creation.

Since their enactment, over $USD 224 billion worth of cleantech and semiconductor manufacturing projects have been announced in the United States.²

These projects span a wide spectrum, from semiconductors and electric vehicles to batteries, wind and solar parts. This surge in activity is projected to create approximately 100,000 new jobs, breathing life into local economies while propelling the nation toward a greener and more sustainable future.³

Success Stories: Leading the Charge

Among the myriad beneficiaries of the IRA and Chips Act, several companies stand out for their commitment to driving the green transition:

1. First Solar: Lighting Up a Solar-Powered Future

First Solar has embraced the momentum of the IRA to champion a solar-powered future. The company’s CEO, Mark Widmar, emphasised the IRA’s role in shaping a sustainable energy trajectory for the nation. With plans to construct a $USD 1.1 billion, 3.5 GWdc factory in Alabama, First Solar’s expansion reflects the company’s dedication to scaling up American solar module manufacturing.⁴

1. Fluence: Empowering Energy Storage Solutions

Fluence, a trailblazer in energy storage solutions, is capitalising on the IRA’s provisions. Their advanced battery-based energy storage systems are optimising energy efficiency, enabling better integration of renewable sources like solar and wind. The IRA’s influence is evident in Fluence’s growing pipeline, which now stands at an impressive $USD 12.4 billion. CEO and President Julian Nebreda recently stated during its Q3 2023 earnings call on August 10th: “We expect to see some initial project awards in the second half of this calendar year that are directly attributed to the [IRA].⁵

1. AECOM: Pioneering Environmental Transformation

AECOM, a multinational engineering and infrastructure firm, is leading the charge in pollution control and sustainable infrastructure. The IRA’s impact has fuelled AECOM’s dedication to reducing its carbon footprint, with the company’s alignment with international climate change charters signalling a commitment to a more sustainable future. The company noted during its Q3 2023 earnings call on August 7th that “activity is increasing from the Infrastructure Investment and Jobs Act, [IRA] and robust state and local infrastructure investment, which are expected to accelerate in fiscal 2024 and beyond. Our pipeline of proposals and bids submitted continues to expand.⁶

A Landscape of Progress and Challenges

While the IRA and Chips Act have set the stage for transformative change, challenges persist. The industry’s rapid expansion is met with obstacles like a shortage of skilled workers, material constraints and lengthy construction lead times. Additionally, as the world races toward a sustainable future, the global cleantech and semiconductor supply chains remain dominated by China.

Despite these hurdles, the IRA and Chips Act have unmistakably reshaped the landscape of investment and development in cleantech and semiconductor industries. As we reflect on their first anniversary, it’s a testament to the power of policy-driven initiatives in steering industries, corporations and societies toward a greener and more prosperous future.

In closing, the IRA and Chips Act underscore the potential for government-led interventions to ignite innovation, drive economic growth and foster environmental responsibility. As we continue our journey toward sustainability, these acts serve as shining examples of what can be achieved when legislation aligns with the urgent call for a greener and more sustainable future.

References

U.S. Department Of The Treasury, November 2022. Available at: https://home.treasury.gov/news/press-releases/jy1128

Financial Times, August 2023. Available at: https://www.ft.com/content/3b19c51d-462b-43fa-9e0e-3445640aabb5

Ibid.

First Solar, August 2023. Available at: https://www.firstsolar.com/es-CSA/Technology/Manufacturing

Fluence, August 2023. Available at: https://ir.fluenceenergy.com/news-releases/news-release-details/fluence-energy-inc-reports-third-quarter-fiscal-2023-results

AECOM, August 2023. Available at: https://investors.aecom.com/static-files/d524efed-ccaf-4310-a543-9693c82b3c9c