Biden's Green Subsidies Are Attracting Billions of Dollars to States

Most of the clean-energy investments spurred by the Biden administration's signature Inflation Reduction Act are going to Republican-leaning states. The act passed the U.S. Congress without any Republican votes.

The new law offers significant tax credits and other support for clean-energy projects, from wind farms to factories that make batteries, solar components or hydrogen. This has made these projects more economically viable and has led to a surge in investment announcements from companies such as the solar manufacturing unit of South Korean conglomerate Hanwha Group and Norwegian startup Freyr Battery.

So far, most of the announcements about new investments in electric vehicles, batteries, wind and solar equipment have come from companies in red states. The Wall Street Journal did an analysis and found that tens of billions of dollars worth of new investments have been proposed in locations such as Georgia, Arizona and Texas.

The Journal found that nearly all of the large manufacturing investments in batteries, solar and wind components announced after the law was passed were located in Republican-leaning states. These investments totaled more than $35 billion.

Red-leaning areas are also hosting the bulk of clean-power generation projects that are currently in late-stage development and poised to benefit from the new law’s subsidies. According to an analysis by business lobby American Clean Power, 82% by capacity of all utility-scale wind or solar farms and battery-storage projects in the late-stage of development are located in Republican-held congressional districts.

Although many politicians in red districts have opposed the Biden administration's renewable-energy and climate push, local lawmakers and communities in those districts are welcoming an inflow of green projects, company executives and industry experts say. This is despite the fact that none of their Congressional representatives voted for the law.

According to industry experts, in many cases red-leaning states and districts have attracted companies with conditions and policies seen as business friendly. These include lower costs for labor, electricity, and taxes, as well as looser controls on permitting and land use.

"These investments are nonpolitical," said Scott Moskowitz, head of market strategy for Hanwha's Qcells U.S. unit. "Everyone supports manufacturing in the United States." Moskowitz's unit earlier this month announced it would spend $2.5 billion to expand its Georgia-based solar-panel factory and build a new set of facilities to produce components as well.

Qcells' factory is located in a district represented by Marjorie Taylor Greene, a Republican who has been skeptical about the dangers of climate change and tweeted that the Inflation Reduction Act "forces Americans to accept the energy disaster known as the Green New Deal."

Although Qcells has not spoken to Ms. Greene specifically, the company has received a warm welcome from elected officials of both parties, according to Mr. Moskowitz.

‍"They might not agree on some of the policy remedies, but they certainly all want us to succeed," he said.

Ms. Greene was not available for comment.

The office of Republican Gov. Brian Kemp has said that Georgia has attracted money "despite the Inflation Reduction Act, not because of it." Gov. Kemp is a champion of the state's clean-energy investment.

Wind and solar power development has been strong in red-leaning Sun Belt states because they tend to get more sun and wind, and have more land available than more densely populated, blue-leaning areas such as the Northeast, according to industry experts.

"Development follows the resource," said JC Sandberg, American Clean Power's chief advocacy officer. He explained that as resources become more accessible, development will follow. This is especially true for energy resources, as they are essential for powering homes and businesses.

Proximity to development projects was one of the reasons Qcells decided to expand its solar panel-making facilities in Georgia, said Mr. Moskowitz. This proximity allows Qcells to take advantage of the growing demand for solar panels and to provide its customers with the best possible products and services.

Other businesses where the new law is expected to spur investment are also growing in both blue and red states. Both Democratic and Republican regions are vying for federal support and tax credits in the development of facilities to manufacture and distribute hydrogen, seen as a low-carbon alternative to fossil fuels.

Industry experts say that many of the recently announced manufacturing deals were likely planned before the Inflation Reduction Act became law, and their locations reflect economic and investment trends that have been years in the making.

Workers and employers have been migrating to red states in the South and Central parts of the country from higher-cost and Democratic-leaning coastal areas. This trend has accelerated since the pandemic began, as people seek out lower-cost areas with more business-friendly policies.

Many companies are expanding their operations in states where they or related companies already have a presence. In Georgia, Qcells is building on an initial investment it made in the state in 2018, following the recent influx of clean-energy deals. Meanwhile, a number of battery-manufacturing investments have been announced since Hyundai Motor Co. announced its plans to build a $5.5 billion electric-vehicle factory in Bryan County last May.

The cost of power is a top concern for many manufacturers, especially those in energy-intensive industries such as battery production, according to Didi Caldwell, president and founding principal of Global Location Strategies, a project-siting consultancy based in South Carolina.

The cost of electricity tends to be lower in Southern and Central states such as Republican stronghold Tennessee, where industrial customers were paying an average of 6.89 cents per kilowatt-hour in October, compared with Democratic powerhouses such as California, where businesses were paying almost three times as much, according to the Energy Information Administration.

Manufacturers are increasingly locating in regions where the cost of living and salaries are relatively low, yet skilled employees are available. That has made Southern states popular, said Corinna Frye, head of the U.S. clean-energy team for hiring consultancy LVI Associates.

According to the U.S. Bureau of Labor Statistics, private-industry employers in the South were paying an average of $35.65 per hour in September, while those in the Northeast were paying an average of $43.84. This is largely due to the fact that the South is predominantly made up of red-leaning states, while the Northeast is generally Democratic-tending.

The availability of skilled labor was the top reason battery-maker Freyr decided to put its factory in Georgia, Bezdek said.