The New Bedford Light

By Adam Goldstein

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Across Bristol County, there are signs that the nation’s clean energy transition is gaining speed.

In New Bedford’s port, Vineyard Wind workers are assembling turbine parts for the nation’s first large-scale offshore wind project.

In Dighton, BlueWave is starting to harvest solar energy and vegetables from roughly 20 acres of farmland.

In Somerset, another company, SouthCoast Wind, just received state approval to build transmission facilities for its planned offshore wind project.

Massachusetts is also developing programs to get more South Coast residents installing solar panels and heat pumps.

All these efforts are fueled by billions of dollars in tax credits and grants from the Inflation Reduction Act. That’s the Biden administration’s major climate and health care spending bill, signed into law in 2022.

The law has been a hot topic on the presidential campaign trail. Recent comments from the candidates suggest its future could be on the ballot.

Republican presidential candidate Donald Trump has been saying the Inflation Reduction Act is part of a “Green New Scam,” increasing energy costs and hurting American energy independence.

“It actually sets us back, as opposed to moves us forward,” he said at an Economic Club of New York event in September.

Trump has pledged to “rescind all unspent dollars” from the law if elected.

Project 2025 — a Heritage Foundation blueprint for the next conservative presidency — calls for a repeal of the Inflation Reduction Act and its renewable energy subsidies.

Vice President Kamala Harris has been touting her tie-breaking vote for the Inflation Reduction Act in the Senate. That allowed the bill to pass through Congress along party lines.

The Inflation Reduction Act “is taking on the climate crisis and lowering utility bills for families … it is helping us to rebuild American manufacturing and drive American innovation,” Harris said in an August press release.

Harris has not released a detailed climate platform. Her economic platform suggests she will build on the Inflation Reduction Act if she wins the election.

No state in New England has more at stake in the Inflation Reduction Act than Massachusetts.

The Healey administration has received upwards of $1.3 billion in grant funds from the law, according to Climate Program Portal data. That’s the most awarded to any state government in the region, said Annabelle Rosser, a policy analyst at Atlas Public Policy.

Many of those dollars will go to boosting heat pump and solar panel adoption across Massachusetts — including on the South Coast.

The state is also a national leader in developing renewable energy resources and the industries that support them. New Bedford is a hub for the state’s emerging offshore wind industry.

Growth in those sectors — and state clean energy procurement — is set to accelerate thanks in part to Inflation Reduction Act tax policy.

Despite campaign chatter, Massachusetts officials and clean energy leaders do not believe any incoming president would rescind significant parts of the law.

The Biden administration has awarded most of the grant funding for climate and clean energy initiatives in the Inflation Reduction Act. It is rushing to get more out the door ahead of the presidential transition.

Environmental law experts say it would be difficult to rescind these federal grant dollars once they are awarded. Efforts to reallocate or withhold significant amounts of unspent funds would likely face constraints. Massachusetts officials are working with federal agencies to lock funding awards down.

“I think we can feel fairly confident that … the money that’s actually been awarded to us will come into Massachusetts,” said Quentin Palfrey, the state’s director of federal funds and infrastructure.

A Republican Congress and president could try to broadly repeal the Inflation Reduction Act tax incentives, as some Trump allies have proposed, or significantly change them. But local clean power leaders say that’s politically unlikely. The incentives have created investment and jobs in red and blue states.

“It would have to overcome quite a bit of opposition,” said Nick d’Arbeloff, president of the Solar Energy Business Association of New England. “I don’t think it would be easy.”

In August, 18 House Republicans wrote to House Speaker Mike Johnson to oppose a full repeal. In September, Johnson talked about using “a scalpel and not a sledgehammer” on the law.

An incoming administration may still tweak the tax incentives from the Inflation Reduction Act, and slow-walk remaining grant funds.

It could also hamper the renewable energy transition in other ways, local climate minds say. That includes installing clean energy-unfriendly leadership in federal agencies, and boosting fossil fuel production.

Those actions would slow progress towards state and national climate goals.

Grant-funded state projects

The Inflation Reduction Act is the largest climate investment in the nation’s history.

It makes an estimated $391 billion available in grants, tax incentives, direct spending and loans for clean energy and climate-related projects. It generates revenue through changes to the federal tax code.

Of that money, roughly $100 billion has been appropriated for grants. An estimated $60 billion-plus has already been awarded.

Massachusetts has been proactive in pursuing Inflation Reduction Act funds for climate-related projects, Palfrey said. A couple of the state’s major grant-funded projects will likely benefit the South Coast.

The state’s Solar for All program, designed to bolster solar energy adoption in low-income communities, will receive $156 million of Inflation Reduction Act grant funds.

It will include a low-income community shared solar initiative, an initiative to put solar panels on public housing, and a residential zero-interest loan initiative (among others).

The City of New Bedford wrote a letter supporting the state’s proposal for the program last year. Massachusetts Department of Energy Resources Commissioner Elizabeth Mahony said it should start up in a few months.

Massachusetts has also received roughly $100 million in grant funding for the New England Heat Pump Accelerator. The regional initiative aims to bring down heat pump costs, develop a manufacturing and installation workforce, and boost adoption.

Direction for the project will largely come from Connecticut and Rhode Island. Mahony is hopeful the project will lower heat pump costs on the South Coast, and create workforce training opportunities.

The vast majority of the Inflation Reduction Act’s discretionary grant funds have been allocated, or are being rolled out, Palfrey said.

So the Healey administration is now focusing on maximizing its federal dollars from the Inflation Reduction Act, as well as those from the Infrastructure Investment and Jobs Act and the CHIPS and Science Act.

The federal government has provided Massachusetts roughly $9 billion through those laws, Palfrey said.

Tax credits benefit South Coast

State officials are concerned over potential changes to clean energy tax incentives in the Inflation Reduction Act, Mahony said.

They are worth hundreds of billions of dollars, and could be worth more than $1 trillion over the bill’s lifetime, per a Goldman Sachs report. They account for most of the money available in the law. They help grow the state’s clean energy industry, and enable large-scale renewable energy procurements.

Clean energy minds doubt the next administration would touch these tax credits, given they are creating jobs and investment across the country.

“Nobody should want all these economic benefits to stop,” said Zach Friedman, the senior director of federal policy at Ceres.

The Inflation Reduction Act expanded two major tax credits that have benefited the clean energy sector for decades: the Investment Tax Credit and the Production Tax Credit.

The Investment Tax Credit enables individuals or businesses to chop up to 30% of their investment costs in a renewable energy system off of their federal taxes. It can be claimed in the year the system is installed.

The Production Tax Credit enables individuals and businesses to cut dollars off their taxes, based on the number of kilowatt hours a clean energy project produces annually. It is good for the first 10 years after a project is put into service.

Both have been important in helping grow the nation’s renewable energy industry, said Barbara Kates-Garnick, a clean energy policy professor in the Fletcher School at Tufts University.

That’s because, while the cost of renewable energy has been falling, potential developers have been hesitant to spend big on renewable energy infrastructure.

These tax credits accelerate the return on investment for clean energy projects. That helps make renewable energy an attractive investment opportunity.

Prior to the Inflation Reduction Act, the investment and production tax credits were only extended for a few years at a time — sometimes retroactively, Friedman of Ceres said. Offshore wind couldn’t use the Investment Tax Credit until recently. The energy storage sector had faced restrictions in using that same tax credit.

That all contributed to a lack of long-term certainty for investors trying to make commitments to clean energy, Friedman said. The tax credits were set to expire in 2022.

The Inflation Reduction Act restored the full Investment and Production Tax Credits until 2032, providing 10-year certainty. It opened up both credits long-term to the solar, offshore wind and energy storage sectors.

The law also created “adder” incentives for clean energy developers. That means they can cut more money off their taxes with these credits if projects use domestically-made components, or if they site facilities or operations in low-income or former energy communities.

This policy sent a strong market signal that the federal government wants long-term development of renewable energy, Friedman said. That has helped spark a wave of investment.

Private companies have announced more than 330 new clean energy and vehicle projects since the Inflation Reduction Act passed, according to an E2 report. Six are in Massachusetts, accounting for roughly $45 million in private sector dollars.

Over 2022 and 2023, the clean energy industry created roughly 7,000 jobs in the state, according to the Massachusetts Clean Energy Center.

The extended tax credits are welcome news for an up-and-down Massachusetts solar industry, d’Arbeloff said. Declining state subsidies, solar component price increases, and rising interest rates have led to stalling growth over the last few years.

Potential savings from the extended tax credits — and coming updates to the state’s solar energy incentive program — may help spur “a fair amount” of new growth, d’Arbeloff said.

The extended Investment Tax Credit has given Massachusetts solar companies the runway to develop projects with confidence, said Sean Burke, the policy director for BlueWave. It is also boosting BlueWave’s investment in energy storage, key to grid stability and energy reliability.

Burke supports the adder incentives that are building a domestic supply chain for components like inverters.

Kates-Garnick said access to the Investment Tax Credit is motivating multinational companies to invest big in American offshore wind projects and a domestic supply chain — despite recent industry challenges.  

Offshore wind developers say the tax credits have been helping them to submit bids for regional procurements, said Kelt Wilska, the offshore wind director for the Environmental League of Massachusetts.

Liz Burdock, CEO of the Oceantic Network, said that tax incentives from the Inflation Reduction Act have helped generate more than $24 billion in offshore wind supply chain investments nationwide.

South Coast communities like New Bedford and Somerset are benefitting from the jobs and economic activity the offshore wind industry is creating in the state, Mahony said.

These Inflation Reduction Act tax incentives — and many others — are becoming popular in Congress, Friedman said. That will complicate efforts to alter them.

“We’re confident that support in Congress is going to continue,” he said.

The Inflation Reduction Act also extended and expanded Residential Clean Energy and Energy Efficient Home Improvement tax credits.

More than 99,000 Massachusetts households took advantage of these incentives in 2023 for a combined savings of roughly $230 million.

Clean energy on the ballot

Still, a new presidential administration could affect the nation’s clean energy transition.

A new administration could roll back emissions standards and other environmental regulations, said Alliance for Climate Transition President Joe Curtatone.

Kates-Garnick said a new president could put leaders in federal agencies who deprioritize the clean energy transition. A new administration could also cause delays in siting and permitting projects.

Yet she is hopeful that states like Massachusetts will continue to lead the energy transition, and that “technology and markets could override national politics.”

Email reporter Adam Goldstein at agoldstein@newbedfordlight.org.

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