The manufacturing sector in the United States is experiencing a significant growth spurt fueled by renewable energy initiatives. However, this progress faces uncertainty as Congress deliberates potential reductions to tax incentives established during the Biden administration.
Since the passage of the Inflation Reduction Act (IRA) in August 2022—recognized as the largest federal commitment to climate and clean energy—the solar, wind, and battery sectors have announced plans to either establish or enhance 250 manufacturing facilities. If these projects come to fruition by 2030, they are expected to generate more than 575,000 jobs and add approximately $86 billion annually to the national GDP, according to a report released by the American Clean Power Association (ACP).
Interestingly, Republican districts stand to benefit significantly from the clean energy tax credits included in the IRA. Nevertheless, GOP lawmakers are contemplating the elimination of these incentives as part of President Donald Trump’s proposed “big, beautiful” spending bill, which labels the initiatives as a “green new scam.”
“Republican districts benefit the most from the IRA’s clean energy tax credits”
According to the ACP, 73 percent of current manufacturing facilities are located in red states. At present, the solar, wind, and battery industries employ around 122,000 people, with solar manufacturing accounting for about 75,400 of those jobs. Data from the US Energy Information Administration indicates that solar power was 2024’s fastest-growing electricity source, contributing to 81 percent of the new annual capacity. Additionally, costs for solar and wind energy have seen a significant decline over the years; utility-scale solar is now regarded as the least expensive source of electricity in many regions globally.
Despite this impressive growth, the solar energy supply chains remain heavily reliant on China, raising concerns over forced labor and human rights violations, particularly in the Xinjiang area. The IRA’s intent was to stimulate domestic manufacturing, primarily through tax incentives, and it was beginning to show positive effects, with US manufacturing capacity for solar modules increasing by 190 percent last year, as highlighted by a report from the Solar Energy Industries Association and research firm Wood Mackenzie.
Currently, the proposed tax credits are under threat from a Republican-controlled Congress pushing for Trump’s agenda through an extensive spending bill. A recent draft from the House Ways and Means committee suggests phasing out the advanced manufacturing tax credit (45X) and other renewable energy tax incentives established by the IRA, while also imposing new conditions that could complicate project qualification for those credits.
Should these legislative proposals become law, significant job losses in the US clean energy sector are anticipated as manufacturing plants may close, according to MJ Shiao, ACP Vice President of Supply Chain and Manufacturing, who spoke at a press briefing last week.
Shiao expressed concerns regarding the recent proposals, stating, “What we have seen from these texts from House Ways and Means, it basically goes too far, too fast. The manufacturers that were being supported by these incentives, and frankly, were trusting that the government was going to honor these incentives, you know, they’re getting the rug pulled out from under them.”
