‘Significant Incentives’: Red States Poised To Cash In On Dems’ Green Energy Bill

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U.S. House Speaker Nancy Pelosi attends news conference in Washington

‘Significant Incentives’: Red States Poised To Cash In On Dems’ Green Energy Bill

John Hugh DeMastri on August 25, 2022

  • Despite vigorous Republican opposition to the Inflation Reduction Act, the bill contains significant manufacturing subsidies that primarily benefit Republican-led states and congressional districts.
  • The bill contains billions in incentives to promote the production of electric vehicles through the construction of new factories and retrofitting of old factories.
  • Republicans also represent the overwhelming majority of the top 10 congressional districts with the most planned or currently active renewable energy projects.

The Inflation Reduction Act is pumping money for electric vehicle initiatives into Republican-led states with congressional representatives who unanimously opposed it.

The new law will offer a tax credit for the production of battery cells at a rate of $35 per kilowatt hour the battery can store, representing a credit of about 35% the cost for a company to fabricate a cell, according to Axios. A survey of major electric vehicle and battery production investments in the U.S. as of June 2022 reveals that roughly 2 out of every 3 are being built in a state with two Republican senators, according to data from Axios.

The law provides “significant incentives … large enough to boost [electric vehicle] production,” Sumeet Gulati, professor of environmental and resource economics at the University of British Columbia, told the Daily Caller News Foundation. “The automobile market has large fixed costs, so more production would imply lower prices of these vehicles.”

Following the passage of the Inflation Reduction Act, South-Korean manufacturer Hyundai is considering accelerating plans to construct an electric vehicle plant in Georgia, as foreign-made cars no longer qualify for electric vehicle tax credits under the new law, according to South Korean outlet Yonhap. The $5.5 billion dollar plant will generate 8,100 jobs in Georgia, according to a Hyundai press release.

The incentives in the Inflation Reduction Act follow recent efforts to promote the manufacture and sale of electric vehicles in the USA, such as a $3 billion program in Feb. 2022 from the DOE to incentivize the production of “advanced batteries” that the DOE described as “critical” to green energy initiatives and the production of electric cars.

Ford, meanwhile, could expect to see tax credits up to $3 billion per year for the expected production of 86 gigawatt hours of battery cells from a pair of Kentucky factories, according to Axios. Ford expects to generate 5,000 new jobs and spend $5.8 billion to construct the new BlueOval SK Battery Park facility in Kentucky.

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Stellantis, producer of American-made cars from brands such as Jeep, Dodge, Ram and Chrysler, said in a statement to the DCNF that the industry is expecting guidance from the Treasury Department regarding the application of subsidies.

The law also provides $2 billion to retrofit existing factories to be able to produce electric cars, according to Axios. Of car marketplace CoPilot’s list of the top 10 car exporting states, seven (South Carolina, Alabama, Georgia, Indiana, Kentucky, Missouri and Tennessee) have two Republican senators, while one (Ohio) is split, and two (California and Michigan) have two Democratic senators.

The Department of Energy (DOE) expects 13 new battery production facilities to be operational within the next five years, primarily in Republican-controlled states, including Tennessee, Kentucky, Georgia and North Carolina, according to a late-December 2021 fact sheet from the DOE. This list did not include retrofits or changes to established factories, such as planned changes to Tesla’s Gigafactory Texas, located in Austin, which would enable battery cell fabrication, according to pro-Tesla electric vehicle news outlet Electrek.

House Minority Leader Republican Kevin McCarthy of California represents the 23rd District of California, which operates or is planning the second-most renewable energy initiatives of any congressional district in the country, according to energy data analytics group Enersection. Wind and solar plants rely on the use of large swathes of land that are primarily available in rural, Republican-controlled districts and states, Politico reported.

Of the top 10 congressional districts for planned or currently operational renewable energy initiatives, Republicans represent nine, according to Enersection. Four of the top five states for wind power, Texas, Iowa, Oklahoma and Kansas, are represented entirely by Republican senators, with the fifth being Illinois, represented by a duo of Democratic senators, according to data from the U.S. Energy Information Administration.

The Republican Governors Association, the Republican National Committee, the Zero Emissions Transportation Association and Tesla did not immediately respond to a Daily Caller News Foundation request for comment.

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