Understanding the Impact of the Inflation Reduction Act in a State Highly Biased Towards Renewables

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TL/DR –

The Inflation Reduction Act (IRA) has helped boost the economics of renewable energy in the U.S. through tax credits and incentives, equating the price of renewable energy to that of energy from fossil fuels. However, solar advocates and developers in Ohio, a state known for its hostility towards renewables, are skeptical that the IRA will help them overcome opposition from fossil fuel-backed groups. This is largely due to Ohio’s regulatory regime that favours fossil fuels, including a law that allows local governments to veto solar and wind farms.


The Impact of Inflation Reduction Act on Renewable Energy

Renewable energy sources like solar farms and wind turbines are growing across America, boosted by the Inflation Reduction Act (IRA) that provides billions in incentives. However, renewable energy developers in Ohio, known for its tough stance against renewables, are experiencing a tricky situation.

Thanks to the IRA, the largest climate change combating investment in U.S. history, renewable energy now costs the same as energy generated by burning fossil fuels. This has led to an increase in tax credits for developers. Yet, misinformation spread by fossil fuel-backed opposition groups and harsh regulations in Ohio have left solar advocates and developers sceptical about the benefits of the IRA in the state.

Ohio’s Stance on Renewables

Ohio’s unfriendly approach towards renewables has seen it label gas as “renewable” energy and pass Senate Bill 52, allowing local governments to veto solar and wind farm projects. This power is not extended to fossil fuel projects, creating an uneven playing field.

A 2024 report by the Sabin Center for Climate Change Law at Columbia Law School highlighted how such opposition has led to nearly 400 local restrictions against wind, solar, and other renewable projects in 41 states.

The Role of IRA in Ohio

Despite these challenges, solar energy is a crucial part of Ohio’s future energy needs. New solar construction is expected to accelerate rapidly in the state, ranking it third among all states by 2027. The IRA, passed in 2022, is expected to reduce greenhouse gas emissions by 40% compared to 2005 levels by offering $270 billion in tax incentives for climate and energy spending.

The tax incentives provided by the IRA have boosted the solar industry, with solar projects in Ohio already benefiting. For instance, solar factories across the state like Illuminate USA, First Solar, and Toledo Solar have benefitted from IRA investments.

SB52’s Impact on Solar Energy

The benefits from IRA are however undermined by the enactment of SB52. The law allows counties to veto individual projects and establish restricted areas where wind and solar projects are banned. The law has resulted in 24 of Ohio’s 88 counties enforcing restrictions on solar projects. This has had a chilling effect, with solar applications filed with the Ohio Power Siting Board decreasing sharply following the enactment of SB52.

Opposition Fuelled by Fossil Fuel Groups

Renewable energy projects like Lightsource BP’s Birch Solar project have had to face strong opposition. Groups have been formed to fight against these projects, often receiving support from fossil fuel-backed entities. In some cases, anti-renewable dark-money groups allied with the gas industry have been linked to these opposition groups.

Despite the challenges, some believe that the incentives from the IRA will help shift public opinion in favor of clean energy. “We’re seeing a number of programs that were created by the IRA that are going to result in a significant amount of economic development and jobs in the state of Ohio,” said Nolan Rutschilling, managing director of energy policy for the Ohio Environmental Council.

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