Federal tax credits meant to drive investment to energy communities and low income areas are working, according to recent analyses.
But those communities may not be seeing results yet.
Last year’s federal Inflation Reduction Act put a lot of money toward clean energy measures meant to address climate change.
The U.S. Treasury says $200 billion has been invested as part of the IRA in its first year.
A Treasury analysis found 81% of clean investment money announced since the IRA passed has been for projects in counties with below-average weekly wages. It also found 70% of clean energy money is going to counties with lower rates of employment.
According to a White House tracker, private companies have committed $3 billion to date to Pennsylvania projects such as clean energy manufacturing and renewable energy. These include an expansion of an EMD Electronics plant in Schuylkill County that makes semiconductor components, and a new regional headquarters for Re:Build Manufacturing in Westmoreland County, where the company plans to make items for the energy, satellite, and aerospace industries.
U.S. Sen. Bob Casey (D-PA) said he pushed for a bonus tax credit for companies investing in communities that historically produced energy from fossil fuels.
“You can’t just say to a community, well the economy changed and there’s nothing we can do about it. You’ve got to do something about it. And we’re well on our way to doing that with this legislation,” Casey said.
Companies can claim the credit if they meet one of three criteria: they build on brownfield sites; or in communities with 0.17% or more direct employment in fossil fuel extraction or at least 25% local tax revenues from extraction; or in places with a coal mine closure after 1999 or coal power plant closure after 2009.
These categories cover more than half of Pennsylvania, where coal had a sharp decline following the natural gas boom more than a decade ago.
A recent report from the think tank Rhodium Group and MIT shows energy communities make up 19% of the country’s population, but they got 37% of clean energy investments in the year since the IRA passed.
Casey said Pennsylvania is already seeing examples. He noted Fulton County is slated to host a 70-megawatt solar project from AES Corporation. In Lycoming County, Doral Renewables is planning a 194-mw solar field that could generate enough power for 23,000 households annually.
Many projects are still in the planning phases.
Jason Fink, CEO of the Williamsport/Lycoming Chamber of Commerce, said companies are securing land for solar projects in the area, but there hasn’t been any construction yet.
“I think it’s premature to be able to measure any kind of impact,” Fink said.
The bulk of jobs created for solar projects are temporary construction jobs. Solar fields don’t generally employ many full-time, permanent staff.
“I would rather see manufacturing and other types of industries that would come into the area that would actually have not only the construction jobs… but also the ongoing job opportunities,” Fink said.
Of the IRA investments in Pennsylvania, the Treasury analysis shows 100% are going to places with lower than average wages. The median household income in Lycoming County is $62,500, compared to more than $74,000 nationally.
Eos Energy in August announced a $500 million expansion program to boost manufacturing capacity of zinc batteries to store clean energy in the Pittsburgh suburb Turtle Creek, where the median household income is $42,000. The company said in a news release that it expects to bring about 650 new jobs to the area once the expansion is complete.
“We’re making investments in places that have not been invested in for at least a generation–and you could extend that, I think, to several generations– places that have been left behind and people who have been left behind,” Casey said. “We’re trying to change that, and it’s working.”
