Our Q&A with PwC's (PricewaterhouseCoopers) Global Energy Advisory Leader Reid Morrison about the impacts of the $750 billion Inflation Reduction Act, which includes more than $350 billion for climate and cleaner energy projects. Morrison has more than two decades experience in the energy industry.
See our main story about Biden signing the Inflation Reduction Act into law
EnergyTech: Some of the incentives for EVs have already been there for years, but adoption has been slow. Why would this bill accelerate the transition?
Reid Morrison: “Adoption was slow not due to the incentives but because of market readiness for EV in general. There was only one major player with limited production capacity that manufactures EV cars eligible to the incentive program.
“Today, the EV landscape has changed and the majority of major car manufacturers have already released their EV and are building plants to expand their capacity. The new incentive extension provides the buyer to not have to make a trade-off between EV and brand loyalty. They can achieve both, hence, the extension of the program is essential to accelerate the global EV transition.
“Originally, it only covered the first 200K vehicles for each manufacturer and that cap is now removed. There is funding for charging infrastructure which will help people overcome range anxiety."
EnergyTech: The pieces of this around building energy use and energy efficiency are relatively unsung. How important could those incentives prove to be?
Reid Morrison: “Buildings (or the built environment) produce 38% of total carbon emissions in the world and humans spend 90% of time in a building (whether residential or commercial). The new incentives contribute to reducing the embodied carbon (such as) carbon produced during building construction as well as operational carbon (from HVAC, lighting, plug load, elevator, etc.).
“It injects a lot of funding for innovations in key materials like cement and steel that are major contributors to GHG emissions and do not currently have good low-carbon solutions available at scale. This funding is needed to drive more innovation and help scale up solutions in these key areas. It also provides the demand side incentives for construction of federal buildings and transportation projects to use low carbon materials.”
EnergyTech: Does this hinder the oil and gas industry in any way, truly?
Reid Morrison: “It is a mixed bag, so that is a net positive compared to prior proposals, and it does acknowledge the overall importance of energy security and environmental sustainability.
“The energy, power, and resource industries will lead the energy transition, or evolution, or it won't happen. The scientific and engineering expertise necessary to evolve the energy system will play to the strengths of the resource industries, and the financial incentives in the IRA will create momentum.
“To expand the clean/renewable energy infrastructure will require a massive rebuild of the rare earth minerals industry as well as onshoring the manufacturing of the solar/wind components. The IRA is squarely focused on these goals which is an important step in the right direction. This is probably the most important part of the IRA and security of the clean energy value chain.”
