A year ago, President Joe Biden The signing ushered in a new era of US industrial policy Inflationary Reduction Act (IRA) And this Chip and Science Act. The two bills, passed within a matter of days in August, provided more than $400 billion in tax credits, loans and grants, all designed to spur development of clean technologies and the national supply chain of microprocessors.
In the past year, the Financial Times The landmark legislation identified more than 110 large-scale manufacturing announcements, including components for microprocessors, electric vehicles, batteries, and components for solar and wind power. We looked them up, talked to experts, and here’s what we learned.
projects
Since the passage of the IRA and CHIP Act in the US, at least $224 billion worth of microprocessor and cleantech manufacturing projects have been announced. In total, they promise to create 100,000 jobs. The FT has tallied announcements by companies of at least $100 million between August 2022 and this week.
Although the pace of announcements has slowed, every month since the laws’ passage has brought new plans. This month, Maxeon Solar TechnologiesBased in Singapore, it announced a billion-dollar solar panel plant in Albuquerque, New Mexico, and US manufacturer First Solar chose Louisiana to install its fifth factory, worth $1.1 billion, the largest capital investment in the region’s history.
“(IRA) is working to accelerate the nation’s energy transition, spur economic growth and start a renaissance in American manufacturing. I don’t think I’ve ever seen legislation in my life that has had a greater impact on the economic growth of this country,” he said. Gregory Whetstoneexecutive director of the American Council on Renewable Energy, a clean energy lobby group, at a roundtable discussion on Monday.
The biggest commitments come from microprocessor groups: Intel will expand a campus in Arizona and Taiwan Semiconductor Manufacturing Company (TSMC) will build a second manufacturing plant in the same state; IBM will invest in the Hudson Valley region of New York and Micron will build the largest semiconductor plant in the United States in Clay, New York.
Planned project sites are spread across the country, but some states and territories are ahead and new manufacturing hubs are emerging. Georgia and South Carolina are the states with 14 and 11 programs, respectively. They are followed by Michigan and Ohio and Arizona.
“If you think about the next 10 to 20 years, what will the Midlands look like? (In the center of the state),” South Carolina Assistant Secretary of Commerce Ashley Tiestel said of Volkswagen’s $2 billion plan to build an electric vehicle plant in the central part of the state. South Carolina awarded Volkswagen a $1.3 billion incentive package.
They protect dollars
The FT found that more than 80 percent of cleantech and microprocessor investments announced last year went to Republican constituencies, despite Republicans in Congress not voting for the IRA and giving only lukewarm support to the Chip Act.
“We have incredible support from both Democrats and Republicans in Georgia,” he said. Martha StoepkerA spokeswoman for Qcells, the South Korean company that makes components for solar power generation has invested $2.5 billion in two Republican districts in Georgia this year, including one represented by Republican firebrand Marjorie Taylor Green.
But a Republican-led House committee recently passed a bill that would weaken the IRA, while the right-wing think tank Heritage Foundation’s Plan 2025 has already created a long playbook for a possible future Republican administration to roll back the law.
“One of the biggest differences in politics between a Republican candidate and a Democratic candidate is what’s going to happen with energy,” said Diana Furchtott-Roth, a former Trump administration official at Heritage. “Plan 2025 is about ensuring that the economy grows faster, and it grows faster at lower costs, especially with government spending.”
Foreign investment
South Korean and European companies are leading the influx of foreign capital, announcing 20 and 19 projects respectively since last year’s big law. The surge in bills comes as America’s allies line up their own policies to compete with IRA subsidies they say have created an uneven playing field.
Paul GentiloniEU’s Economic Commissioner said Financial Times Last month it called for “the IRA pull factor to increase” and Europe to step up its response. In February, the EU announced an industry plan to compete, including subsidies to keep developers on board.
Mayor BurgerA Swiss manufacturer of solar power products announced last month that it was putting its expansion plans in Germany on hold to open a $400 million factory in Colorado to take advantage of IRA tax incentives.
“I would be very happy if Europe could quickly catch up to this new climate reality and give more support to companies here… Later, more investment is going to go to America, not just from Mayor Burger, but from others,” he said. Gunter Erfurt, the company’s CEO.
A few Chinese companies have made investments – despite the erosion of ties between Beijing and Washington – but many are too small to be included in the FT’s analysis. The largest include Gotion’s $2.4 billion battery factory in Michigan and Fuyao Glass’ $300 million auto glass factory expansion in Ohio.
Although the IRA’s electric vehicle tax credit allows developers to source certain products overseas, imports China They don’t qualify.
A Republican-led congressional committee on China sent a letter to Ford last month. It announced in February that it was investigating a technology licensing deal with Chinese battery giant CATL for a $3.5 billion Michigan battery factory.
Obstacles
According to a July report by the Semiconductor Industry Association and Oxford Economics, more than one million US jobs for computer science engineers and engineers are at risk of becoming vacant by the end of the decade.
Associated Builders and ContractorsThe U.S. faces a shortage of 500,000 construction workers this year alone, as a construction industry lobby group tries to keep up with demand spurred by announcements of new factories.
“A lot of new (plants) are coming out,” said Greg Lowe, chief executive of microchip maker Wolfspeed, which last year announced a $5 billion factory in North Carolina. “The manpower to build the factory is probably the biggest challenge… The second challenge is that once you build the factory, you have to equip it with tools, and the lead time for microchip tools is certainly long.”
Long construction periods, overseas technological advancements and tight supply of raw materials will hamper the development of supply chains.
In a recent report from BloombergNEF It warns that new solar cell factories in the US could become “functionally obsolete” in the next five years due to long construction timelines and new developments in Asia.
S&P Global Commodity Intelligence He said on Tuesday that the U.S. would find it difficult to meet demand for critical minerals such as nickel by relying on domestic sources and free trade partners that are conditional on securing IRA tax credits.
This means East Asia will maintain its grip on global supplies of cleantech and chips this decade, analysts say.
The International Energy Agency (IEA) China expects to control more than 60 percent of the global supply chain for wind, battery and solar power by 2030. Benchmark Mineral Intelligence China expects to more than double the battery production capacity of the US and Europe by the end of the decade.
Research firm Rystat Energy predicts that even if the U.S. becomes self-sufficient in battery cell and solar module production by 2025, it will depend on imports for components such as anodes and cathodes for batteries and polysilicon for solar modules.
“Both large economies need each other to a certain extent,” says Andres Glusky, chief executive of AES, one of the world’s largest developers of public utilities. “A total breakdown in trade would not make sense, or benefit the global fight against climate change,” the expert said.
