On August 16, 2022, Biden’s Inflation Reduction Act was passed into law and the bill is a massive boon in the shift to net zero which will provide USD $370 billion in incentives for clean energy manufacturing including hydrogen and electric vehicles.
The Importance Of Biden’s Inflation Reduction Act (PHOTO: PV Magazine)
Biden’s Inflation Reduction Act
Biden’s Inflation Reduction Act is relevant for Australia because the scale-up in clean energy manufacturing favors Australian mineral producers. Biden’s Inflation Reduction Act requires automakers and battery manufacturers to source materials from the US or other countries with which the country has a free-trade agreement in order to redeem subsidies,
According to Ron Mitchell of Global Lithium US senators have guarantees that the bulk of that material is anticipated to be sourced from Australia and Canada. Chile and Peru would also be important competitors in the minerals sector. Moreover, if Australia expects to be more than just the world’s quarry in the net zero change, the Act presents challenges. Most noteworthy is the hydrogen production tax credit. According to the law, hydrogen producers will gain a tax credit of USD $0.60 per kilogram of hydrogen produced.
Analysis Shows About The Credit Of Biden’s Inflation Reduction Act
One analysis indicates this credit could be improved cumulatively if federal regulations surrounding wages and apprentice involvement are satisfied. In this way, the subsidy could potentially reach USD $3 per kilogram and the hydrogen production tax credits will be valid for 10 years for any project whose construction commences before January 1, 2033. A commentator for Bloomberg said that “It’s absolutely causing people to do projects that they wouldn’t have considered before.” One suggestion that would radically diminish emissions is producing hydrogen from solar and wind when energy is abundant, then burning hydrogen in high-demand times.
Unfortunately, all of this is hard to contemplate for the Australian grid when we still produce only about a 40percent of our energy through renewables. A decade of inaction has placed clearly behind the 8-ball now that this new opportunity has surfaced.
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