Jump to Industrial Transformation

Clean Technology Manufacturing 

The law makes the largest ever investment in U.S. manufacturing of clean energy technologies, including wind, solar, batteries, EVs, and more. These investments are essential to link climate action with good union jobs, counter the racial and income inequality fed by manufacturing job losses, and build secure domestic supply chains instead of relying on overseas production that is marred by forced labor, higher levels of pollution, and shipping bottlenecks. See here for our fact sheet outlining six reasons we need to spur increased U.S. clean technology manufacturing.

The Inflation Reduction Act includes more than $40 billion in tax credits to expand clean technology manufacturing. It also offers significant funding for the Biden administration to use executive action to spur clean manufacturing growth. The law will: 

• Support new clean technology manufacturing facilities with an expanded investment tax credit: The law includes $10 billion for the 48C tax credit, which will support the establishment, re-tooling, or expansion of manufacturing facilities to produce solar, wind, battery, EV, energy efficiency, and other clean energy technologies. Of this amount, $4 billion is reserved for manufacturing investments to boost job growth and economic opportunities in communities facing coal facility closures due to the energy transition. The 48C expansion will create more than 110,000 jobs over the next 10 years. 
• Promote solar, wind, and battery manufacturing with a new production tax credit: The law establishes a new manufacturing production tax credit worth more than $30 billion to support the expansion of solar, wind, and battery manufacturing and critical minerals processing. While the 48C credit has been effective in encouraging small- and medium-sized investments in many clean technology sectors, these four sectors warrant larger, sustained investments due to a significant lack of domestic manufacturing capacity, stiff global competition, and recent disruptions. Critically, manufacturers in these four sectors have a “direct pay” option that will allow them to take advantage of the new tax credit for five years without relying on Wall Street financing that is typically unavailable for manufacturing investments. This new tax credit to fill clean technology supply chain gaps will create more than 560,000 jobs over the next decade. 
• Enable bold executive action to grow clean manufacturing: The Inflation Reduction Act includes $500 million for the Defense Production Act—a versatile policy toolbox that the Biden administration has started using to support manufacturing growth for critical clean energy goods—such as  solar panels, heat pumps, and grid efficiency components. The new funding will enable the administration to purchase goods, extend loans, install new technology, or otherwise support manufacturing in clean energy sectors. 

Industrial Transformation

The industrial sector produces nearly a third of U.S. climate pollution, when accounting for electricity use. It is the only source of U.S. greenhouse gas emissions that is projected to rise in the coming decades. Industry is also responsible for toxic air pollution that exposes a quarter of a million people to elevated cancer risks each year, primarily in Black communities. 

To help address industrial pollution, the law establishes and expands investment programs to reduce emissions in energy-intensive industries—such as steel, aluminum, and cement. The law launches a first-of-its-kind program to propel commercial-scale deployment of emissions-reducing technology at U.S. manufacturing facilities, expands a tax credit for industrial transformation projects, and lays the groundwork for public purchasing of clean construction materials. 

While the BIL makes important investments in research, development, and demonstration projects in certain industrial technologies, the Inflation Reduction Act makes essential investments to broadly deploy emissions-reducing technologies across industrial sectors. Together, these investments could eliminate millions of metric tons of harmful emissions while boosting competitiveness and job creation at U.S. industrial facilities. The law will:

• Directly invest in emissions-reducing technology at manufacturing facilities: The law launches a new, nearly $6 billion program to help manufacturers carry out emissions-reducing upgrades at steel, aluminum, cement, and other energy-intensive industrial facilities. This program will create nearly 120,000 jobs over five years and cut nearly 70 million metric tons of annual climate pollution—the equivalent of running over 18,000 wind turbines for a year.
• Cut industrial emissions through a tax credit: In addition to providing $10 billion for the 48C tax credit to spur clean technology manufacturing, as described above, the law makes the tax credit available—for the first time—for manufacturers to install equipment that achieves an at least 20% reduction in climate pollution.  According to BlueGreen Alliance internal analysis, the program expansion will cut an estimated 7 million metric tons of annual greenhouse gas emissions—equivalent to the yearly climate pollution emitted by about 1.5 million gasoline-powered vehicles. 
• Support government purchases of low-emissions materials: The law includes new investments to support the Biden administration’s Buy Clean initiative, which will use the U.S. government’s vast purchasing power to drive demand for low-emissions manufacturing of construction materials. To lay the groundwork for Buy Clean, the law includes $250 million for grants and technical assistance that will help manufacturers report their emissions in environmental product declarations—a tool to accurately compare the emissions that go into manufactured goods. The law also invests more than $5 billion for DOT and the General Services Administration (GSA) to support the use of low-carbon materials for public buildings and highways.