One year after President Joe Biden signed the nation’s first comprehensive climate legislation—the Inflation Reduction Act—Republicans have yet to find their “Solyndra.”
Although GOP Congressional leaders have organized hearings and fired off letters to administration officials, they have not hit upon a scandal—Solyndra was a California solar company that went bankrupt in 2011 after receiving aid from the Obama administration—they could use to tarnish the law’s unprecedented $370 billion federal investment in clean energy.
In part, that’s because Biden’s team has been cautious to avoid missteps—in at least two cases, withdrawing grant offers to companies with ties to China after rumblings from Capitol Hill. But another factor surely is the disproportionately large economic benefits that red states and districts are enjoying from clean energy development spurred by the law.
Out of 210 major clean energy manufacturing projects announced since the Inflation Reduction Act was enacted, Republican Congressional districts have captured 72 percent of the 74,181 new jobs and 86 percent of the $86.3 billion in private investment, according to tracking by E2, a group of environmental entrepreneurs affiliated with the Natural Resources Defense Council.
Climate action advocates fully expect that Republicans, who enjoy lopsided political support from the fossil fuel industry, will continue to look for opportunities to attack the effort to transition the U.S. economy to carbon-free energy.
Raising alarms about China’s dominance of the global clean energy supply chain, for example, has become a favored GOP talking point. But since one of the main tenets of the law, known as the IRA, was to break free of dependence on Chinese technology, environmental advocates believe the law can withstand the assaults, especially as scores of new plants open in the middle America “battery belt” taking shape from Michigan to Georgia.
“Nothing succeeds like success,” said Gregory Wetstone, president and CEO of the American Council on Renewable Energy. “As we see more jobs created, more manufacturing, more generation, I think we’re already at a point where it’s a very difficult political place to be, to say, ‘I want to turn back the clock.'”
A Search for the Next Solyndra
A decade ago, GOP foes of federal climate action focused their wrath on Solyndra, the bankrupt solar company that received $535 million in loan guarantees from the Obama administration, which they viewed as a poster child for wasteful government clean energy spending.
Republicans, who had just taken control of Congress after running against both Obama’s health care reform and his climate plan in the 2010 midterms, held hearings spotlighting the failure, while Mitt Romney, then-Republican presidential contender (and now, U.S. Senator from Utah) sought to make it a campaign issue.
The same loan program that helped Solyndra gave a boost to successful companies, including Tesla, and netted at least $5 billion in revenue for the U.S. government within two years of Solyndra’s failure. Nevertheless, Republicans on Capitol Hill sought to raise the specter of a new Solyndra soon after passage of the IRA. “Solyndra on steroids,” said Rep. Cathy McMorris Rodgers (R-Wash.), who soon would take over as chair of the House Energy and Commerce Committee. She led a group of Republican members of Congress who put Biden’s Department of Energy on notice that they would seek to scrutinize its expanded loan-making authority.
But the closest that the Republicans have come to finding a new Solyndra was a company that almost got a federal grant: Texas-based battery tech company, Microvast. The Biden administration withdrew a $200 million offer to the company in May, after GOP protests about Microvast’s ties to China (it has a production facility there.) The Energy Department also broke off talks with another potential grant recipient that has a production line in China: Amprius of Fremont, Calif., which was in line for $50 million to help expand its U.S. manufacturing.
So instead of showcasing wasteful spending at a June hearing called, “Microvast And More: Oversight Of President Biden’s Energy Spending Spree,” Republicans provided a platform for the deputy director of the Biden Energy Department’s grants office, David Howell, to detail the agency’s due diligence process, and how it has been improved.
“All right,” the oversight panel chairman, Rep. Morgan Griffith (R-Va.), said at one point. “So the vetting process is working, at least in this regard.”
Nevertheless, he and other committee members warned that China could end up being the beneficiary of Biden’s climate investments.
“President Biden’s rush to green agenda puts China more firmly in control of our energy supply,” Rodgers said at the same hearing.
Rep. Frank Pallone of New Jersey, the highest ranking Democrat on the committee, countered that the point of the IRA was to reduce clean energy tech dependence on China.
“On the Republican side, there’s this notion that we’re so far behind China, it’s almost like there’s nothing we can do to catch up, and maybe there’s no use even trying,” Pallone said. “…But we can’t afford to quit.”
Microvast, meanwhile, has maintained that neither the Chinese government nor its communist party have ownership or control of the company, and characterized the grant withdrawal as a surprise. Nevertheless, the company, which is traded on NASDAQ, told investors that the Biden snub will not interfere with ongoing construction of its battery facility in Tennessee, or its plans to “invest significantly in its U.S. expansion.”
Clean Energy Investment Shades Red
Supporters of federal clean energy investment clearly hope that as its economic benefits spread, they will help harden the program against political attacks.
Private industry has announced at least 210 clean energy projects since the IRA went into effect, with 38 states to be home to at least one major new facility and 31 states getting at least two, according to tracking by E2. The Congressional district that is expected to see the biggest windfall is Georgia’s 11th, just northwest of Atlanta, where three new projects add up to $6.7 billion in new investment and an estimated 5,660 jobs.
For example, a new EV battery plant in the district planned by Hyundai and its partner, SK On, is expected to generate 3,500 jobs. It is one of the largest economic development projects in Georgia history, rivaled only by the auto plant it is designed to supply: Hyundai’s first dedicated EV plant in America, to be built near Savannah.
Republican Gov. Brian Kemp appeared, along with Georgia’s two Democratic Senators, at Hyundai’s groundbreaking at the auto plant last fall, and has since sparred with Sen. Jon Ossoff over who should get credit for Hyundai’s investments in the state. But Republican Rep. Barry Loudermilk, whose district won the battery plant, hasn’t given up his skepticism over the IRA. “I’m not against this industry and I’m all about bringing in new technology, but it has to be market-driven,” Loudermilk told The Guardian newspaper earlier this year. “When the government heavily subsidizes something it will crest and then fall down because the market hasn’t matured.”
But the Hyundai plants won’t be alone. E2’s tracking shows that 115 battery and EV factories or expansions have begun moving forward in the United States in the wake of the IRA’s passage, with the most pronounced development in Republican-led districts and the South.
Tyler O’Connor, an energy and government affairs lawyer in Washington who served as energy counsel to the House Energy and Commerce Committee during the drafting of the IRA, said that those working on the legislation knew that it would trigger a boom in red states.
“I think it reflects broader national trends about which areas have the land and business environment that companies prioritize when making investment decisions,” O’Connor said. “The law wasn’t written to specifically benefit any geographic region, but it is not surprising that the investments from the law have tended to be in particular areas.”
That includes the new U.S. “battery belt,” mostly in Southern and midwestern states. According to the Federal Reserve, because of the potentially high cost of transporting large quantities of lithium-ion batteries, much of the investment in new gigafactories is occurring in the same geographic region that already is home to auto manufacturing. As a result, the IRA is bringing investment to many Republican-leaning states.
“I think some Republicans are reluctant to criticize a law that is revitalizing a lot of industrial communities in the United States, and bringing jobs back to red states and red communities,” O’Connor said.
But the IRA’s benefits will spread further, depending on how rapidly businesses and consumers adopt clean energy technology, according to the Colorado-based think tank, RMI (formerly known as the Rocky Mountain Institute). In an analysis that includes some of the most lucrative but difficult-to-track benefits of the law—tax breaks—RMI found that red states comprise all of the top 10 states for potential clean energy federal investment on a per capita basis under the IRA.
All of those states—led by Wyoming, North Dakota and West Virginia—are currently among the nation’s most fossil fuel-dependent economies. But they’ll only reap the benefits of the IRA under what RMI calls the “climate ambitious scenario” in which they adopt clean energy technology at the pace and scale needed to meet the U.S. goal to cut carbon emissions in half by 2030.
Economic Risks, Political Perils
Since many of the tax incentive rules under the IRA are just now being set, and the impacts of the law will ramp up during the 2024 election cycle, climate action advocates think political attacks on the law and Biden’s climate program in general are still likely—especially given the challenges facing companies engaged in the energy transition.
Only last week, the 20-year-old electric bus maker Proterra filed for bankruptcy protection as it sought to restructure its operations due to “market and macroeconomic headwinds.” Proterra does not fit the Solyndra mold, however, since it is seeking to continue its operations. And while the company has gained attention under Biden (the president took a virtual tour of the company in 2021 and appointed its CEO, Gareth Joyce, to an advisory council on exports), the main federal support it reported to the Securities and Exchange Commission in its bankruptcy filing was a $10 million Covid relief loan it received under President Donald Trump, a sum that was later forgiven, like 96 percent of the loans under that program.
But there well may be clean energy projects and companies that don’t make it after getting support under the IRA. The purpose of the Energy Department’s loans programs office—the office that supported Solyndra and has received greatly expanded lending authority under the IRA—is to catalyze investment in technologies that don’t have easy access to capital.
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Donate Now“There’s always going to be a balance between making sure the U.S. government is making prudent investments, and the fact that by design, the program is intended to invest in companies that might be considered too novel or risky for investment by large U.S. financial institutions,” said O’Connor. “There is a tension, and I think this administration is doing a very good job so far of threading that needle.”
The Biden administration also has sought to be proactive in its dealings with Congress, providing joint briefings to both Republican and Democratic staffers on Capitol Hill, updating them on the latest efforts of the Energy Department to implement the law. It’s not clear how much criticism that will head off.
“The threshold to call a Congressional hearing is not extremely high,” said Jason Grumet, CEO of the American Clean Power Association. “And there are aspects of this conversation which a lot of people will still enjoy trying to kind of polarize.”
But he noted the fizzling of the effort by hard-line House Republicans to attach a repeal of the IRA to the must-pass debt ceiling bill in May. “That did not go well,” Grumet said.
“I think the reality of this progress is now starting to lay in,” he said. And while he anticipates attacks, “I don’t think we are expecting the level of hyperbole that was suggested several months ago.”
Marianne Lavelle
Reporter, Washington, D.C.
Marianne Lavelle is a reporter for Inside Climate News. She has covered environment, science, law, and business in Washington, D.C. for more than two decades. She has won the Polk Award, the Investigative Editors and Reporters Award, and numerous other honors. Lavelle spent four years as online energy news editor and writer at National Geographic. She spearheaded a project on climate lobbying for the nonprofit journalism organization, the Center for Public Integrity. She also has worked at U.S. News and World Report magazine and The National Law Journal. While there, she led the award-winning 1992 investigation, “Unequal Protection,” on the disparity in environmental law enforcement against polluters in minority and white communities. Lavelle received her master’s degree from Columbia University Graduate School of Journalism, and is a graduate of Villanova University.
