GRAY MAGUIRE: SA bucks the trend of staying abreast of landmark US law

In August 2022 I penned a column on US President Joe Biden’s freshly minted Inflation Reduction Act. I closed out with the exhortation that “SA policymakers should stay abreast of the impacts of this landmark policy”. A year later and it seems folks outside SA are doing precisely that, with a growing body of evidence reflecting just what is possible in a year with a well-thought-out policy framework.

The act is a voluminous bipartisan policy document focused on clean energy provision, affordable healthcare and effective corporate taxation that targets inflation through national deficit reduction. It represents the single largest investment in climate action for the world’s largest greenhouse gas emitter, with about $369bn in investments and tax incentives heading towards clean energy and climate change mitigation initiatives. Despite the price tag, the act is fiscally agnostic thanks to the enormous savings it delivers through its wide-ranging approach and the private sector investment opportunities it generates.

In August the American Clean Power Association released a report that listed $270bn in clean energy investments in 83 new or expanded manufacturing facilities across the US since the introduction of the act. These investments have created 30,000 jobs so far, from a near ninefold increase in solar panel production as well as a 15-fold increase in grid scale battery storage, thanks to the local content requirements of the act.

In fact, the US battery production pipeline is growing at such an exceptional rate that is it outpacing the EU and even China, resulting in corporates such as Volkswagen and Northvolt putting their European investment plans on hold and reallocating investments to the US. 

Many car manufacturers have invested billions in their US electric vehicle manufacturing capacity in the past year so they can continue to produce vehicles at a price that will remain eligible under the consumer credits criteria of the act. Other focus areas for the act, such as green hydrogen and carbon capture and storage, have longer lead times on their project development, but several projects are in the pipeline.

Slow progress

The response from the rest of the world has been mixed, with several Asian companies following a similar path to Volkswagen and Northvolt by increasing production investments in the US. The EU has responded with a “temporary crisis and transition framework” that allows the EU to increase the speed of state aid to companies in the green tech sector, which has been bogged down in complexity and bureaucracy. 

Meanwhile, in sleepy SA a certain mineral resources & energy minister continues to contort himself into a pretzel to avoid any form of energy transition (let alone a just one), which must surely be the cause of the agonisingly slow progress on the SA Renewable Energy Master Plan.

Originally developed in response to the 2019 electricity master plan — the 2019 Integrated Resource Plan (IRP) — the master plan theoretically seeks to take advantage of the 3,600 wind turbines and 14-million solar panels the IRP 2019 mandates us to add to the grid. Clearly, this represents an enormous local manufacturing opportunity, but unfortunately one that supports the just energy transition narrative that is so disparaged by our coal-fundamentalist political Übermenschen.

Despite the immediacy of our energy crises, the Renewable Energy Master Plan has thus still not been finalised, years down the line. This has left private businesses and households with no option but to import $10bn worth of solar panels, batteries and inverters over the past 10 years, a quarter of that in the past six months according to think-tank Trade & Industrial Policy Strategies.

Surely this column’s whistle-stop tour of the green economic growth elsewhere must make us realise that the train is leaving the station without us.   

• Maguire is carbon project manager at Climate Neutral Group SA. He writes in his personal capacity.