On its own terms, the Inflation Reduction Act seems to be working. But what exactly are those terms? Former National Economic Council head Brian Deese—an influential voice in shaping the IRA—has explained that it was designed with a specific goal in mind: to “encourage private investment in clean energy,” including wind, solar, and electric vehicles as well as more emergent technologies like carbon capture and storage, hydrogen, and geothermal. “Tax incentives make the investments attractive, but businesses, along with rural cooperatives, nonprofits and others, must judge whether investing their own money in a hydrogen factory or a wind farm will pay off,” he elaborated in The New York Times nearly a year on from the IRA’s passage. “In the end, the law will be only as successful as their appetite to invest at a scale that will meaningfully reduce emissions warming the planet and increase the nation’s energy security.”
Sure enough, a clean technologies investment tracker Deese—now at the Massachusetts Institute of Technology’s Center for Energy and Environmental Policy Research—helped develop shows a big uptick in private-sector green investment. As of the third quarter of 2023, clean energy and transportation investment was up 42 percent over the same period last year. Within a year of its passage, the IRA led to $282 billion of new investment and created some 175,000 jobs, Goldman Sachs researchers found. They also estimated that it will drive $3 trillion worth of investments over the next decade.