A year following the enactment of the most extensive climate change legislation in U.S. history, designed to ignite a surge in American clean energy development, President Joe Biden’s agenda is being challenged by economic realities.
Escalating financing and materials expenses, unstable supply chains, delayed regulatory processes in Washington, and sluggish permitting have wreaked havoc across the clean energy sector.
These issues have impacted projects ranging from offshore wind developer Orsted’s cancellations in the U.S. Northeast to scaled-back electric vehicle manufacturing plans by Tesla, Ford, and GM.
This bleak outlook for clean energy poses challenges for Biden, who aims to achieve a net-zero economy by 2050, a goal that cannot be solely met by the billions in tax credits outlined in the Inflation Reduction Act (IRA).
Despite heralding the IRA as a symbol of significant progress in the fight against climate change at last year’s United Nations climate summit, Biden is expected to skip this year’s event amid concerns that the world is not moving quickly enough to combat global warming.
Clean energy experts warn that these mounting setbacks will make it even more challenging for the United States to achieve its ambitious decarbonization targets by mid-century.
John Hensley, VP of the American Clean Power Association, acknowledges that progress has been made, but it falls short of what’s necessary to meet these goals.
Rising costs and disrupted supply chains are affecting projects worldwide, with no major nation on track to meet emissions reduction goals outlined in the Paris accord.
A White House official points to macroeconomic setbacks and local-level bottlenecks but emphasizes progress in areas like the expanding EV market and offshore wind development by Dominion Energy off the coast of Virginia.
Over 56 gigawatts of clean power projects, enough to power nearly 10 million homes, have been delayed since late 2021.
Solar projects account for two-thirds of these delays, partly due to import restrictions aimed at combating forced labor and tariff evasion in a supply chain dominated by Chinese goods.
Permitting issues, local disputes over project locations, and lengthy grid connection processes are among the industry’s major challenges.
Tight supplies and robust demand for renewables have driven up contract prices, potentially leading to higher costs for consumers.
While progress is slower than some expected, many remain optimistic about the IRA’s impact on the clean energy supply chain.
However, turmoil in the U.S. offshore wind industry is a significant setback, with developers renegotiating or canceling contracts due to soaring costs and taking massive writedowns on projects.
The Biden administration’s goal of deploying 30 gigawatts of offshore wind by 2030 is increasingly seen as unattainable.
Meanwhile, some corporations are delaying investment decisions while awaiting Treasury Department rules on how the IRA’s tax credits can be utilized.
Despite these challenges, the U.S. can take pride in its efforts to combat climate change, especially when compared to the previous administration’s rollbacks of climate protection policies, according to experts.
These hurdles are viewed as normal in the development and deployment of clean energy, and the U.S. can still present its progress with pride.