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How will the Inflation Reduction Act spur job creation for the climate tech sector?

According to a new report, the Inflation Reduction Act is poised to support and dramatically increase the U.S. climate sector.

A hand made sign that says "invest in green jobs" with wind turbines drawn in marker on it, behind held up by 2 hands.

Image via Shutterstock/ Infinity8888

Employment. A concept created by humanity that has haunted our species for thousands of years. Since the Mesopotamians discovered irrigation and ceased humanity’s nomadic existence, regimes have risen and fallen, religions have blossomed and wilted into obscurity, and thousands of useless dieting trends to vanquish belly fat have gone viral and been debunked. But the concept of a job, of working at the same set of tasks each day to earn an income or the protection of a feudal overlord, has persisted. 

And it is more important than ever. Job creation in the U.S. is a crucial input for the country’s transition to a green economy. As we slowly move away from fossil fuels and toward renewable alternatives, many jobs will be created to accommodate the nation’s new way of creating energy, mitigating climate change and (hopefully) producing goods and services.

And sustainable job creation’s new best friend is the Inflation Reduction Act (IRA). An analysis released in August by BlueGreen Alliance estimates that over 100 climate, energy and environmental investments from the IRA will create 9 million jobs across the environmental sector by 2032, which breaks down to about 900,000 new jobs annually. The report itself categorizes each estimated number of jobs to sectors (electricity, transportation, building, etc.), and then specifies whether the jobs will result from public spending or, for some categories, public and incentivized private spending. 

Job creation in the U.S. is a crucial input for the country’s transition to a green economy.

Ben Beachy, vice president of industrial policy at BlueGreen Alliance, spoke about what the numbers in the report represent, saying, "The vast majority of the jobs would be nonmanagement jobs … more accessible." This is important to remember, because lately, I’ve seen a number of articles released in the media exclusively highlighting growing interest in analytical and engineering jobs in the climate tech sector. Important positions to be sure, but not the only jobs necessary to run the climate sector and certainly not positions representative of the working population that lacks an advanced STEM degree.

It’s important to understand the tangible impacts that large bills such as the IRA have on our country. So let’s look at the "manufacturing" section of the report as an example. Manufacturing positions, according to BlueGreen Alliance, include turbine and solar panel manufacturing, electric vehicle (EV) battery production and reduced emissions steel and cement production. According to the report, nearly 900,000 jobs will come from the manufacturing sector alone in the next decade. 

And Beachy impressed upon me the enormity of the investment the IRA places in manufacturing jobs. "There are over $50 billion in clean manufacturing investments in the bill, many of which are the first of their kind to invest in climate tech to help reduce emissions from the industrial sector, which is a large, overlooked and growing source of chronic pollution." 

And that’s all great, but how does that giant sum of money translate to actionable impact for the American people? Getting granular, the IRA includes the Section 48C Manufacturers’ Tax Credit. Normally, I’d advise you to read this when you can’t sleep at night, but stay with me. This legal tax code actually contains some incredible information. Specifically, this section sets aside $4 billion for communities that have experienced the closure of coal mines or coal-fired power plants. When I spoke to Beachy about 48C, he excitedly explained that the $4 billion is meant "to create an opportunity to boost job growth and greater equity in communities that are facing economic hardships and energy transitions."

There are over $50 billion in clean manufacturing investments in the bill, many of which are the first of their kind to invest in climate tech to help reduce emissions from the industrial sector.

This money can be used to establish or expand manufacturing facilities that produce wind, battery, solar, EVs and other forms of climate tech, exclusively in the communities hit by coal mine and power plant closures. While it’s too soon to comment on the execution of this plan, I know I’ll be watching how it unfolds, and you can bet I’ll be back to let you know how these communities are benefiting (or not).

And while the IRA is aiding communities transition from a dirty to clean economy, individuals of every demographic are expressing their own interest in making a career change. Climatebase, an online search engine specifically designed for job seekers in the climate industry, spoke to me about the data it’s collected from users and companies that post jobs. Specifically, co-founder Evan Hynes told GreenBiz that after opening its metaphorical doors in 2020, Climatebase expects to reach a total of 1 million users by the end of 2022. 

Additionally, Hynes shared the demographic makeup of applicants to Climatebase’s fellowship program (Hynes didn’t have general Climatebase user demographics on hand but reasoned that the fellowship program was still a useful peek behind the curtain). Applicants ranged in job experience from 1-2 years all the way to over 20 years of experience, demonstrating that the climate transition is pulling experience from across the board. 

The successful startup is planning to release a public report detailing specific data sets in the near future, but Hynes was able to share that as of right now, at least one-third of the companies advertising available positions on Climatebase are preseed or startups. Given the injection of tax incentives the IRA just pumped into the climate tech sector, I think it's fair to assume that that already exciting number will increase. 

So today I leave you with the knowledge that the IRA will invigorate the U.S. climate tech sector in a hitherto unseen manner. As Beachy and I wrapped up our conversation, he said, "In the years to come, we’ll probably look back on this bill and the moment we started building more reliable and equitable, clean energy supply chains, instead of hitching our climate goals to production overseas that is often exploitative and polluting." Here’s hoping.

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