The Inflation Reduction Act and ...projects!
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by Richard Maltzman,
Dave Shirley
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Date
Photo Credit: CleanTechnica.com
I was a bit surprised that an Internet search on "Inflation Reduction Act" (US H.R.5376, just signed into law this past week by US President Biden) and "project management" didn't yield many results. I found it surprising because whatever your political views (this is not a political post), this is a sweeping piece of legislation especially when it comes to the intersection of projects and 'green' - that is, sustainable development.
The legislation's impact on green infrastructure is summarized very well in a posting by international law firm Davis Polk.
That article states that the legislation:
...includes approximately $369 billion in tax credits and investments in clean energy. Once enacted, the bill will be the largest clean energy investment in U.S. history. This client update outlines the key climate and energy provisions of the IRA, as well as companion legislation under consideration relating to permitting of energy projects.
Projects. Yes the paragraph begins with US$369B and ends with the word projects.
So I would assert that this legislation and the investment it makes in projects means that opportunities for project managers - especially project leaders who are well-versed in concepts like benefits realization, the UN's Sustainable Development Goals, the idea that projects yield long-term results - things like that. This blog has been posting about those topics since 1893. Or at least it feels like that.
Let's dive in a bit deeper into the legislation, to reinforce the idea that this will result in a huge boost in demand for project managers.
Again, (adapted) from the Davis Polk article, here are the key elements:
- Tax Credits to 'Decarbonize' the economy
- About $270 billion of the approximately $369 billion in investments promoting clean energy and climate resilience are in the form of federal tax credits to incentivize decarbonizing the economy through energy production from clean sources, carbon sequestration, clean transportation and manufacturing of clean energy equipment.
- Investments in climate priorities
- The IRA also calls for grants and loans designed to further the same decarbonization priorities as the tax credits described above
- Establishment of the Methane Emissions Reduction Program to cut methane pollution
- In addition to tax credits and spending to promote clean energy, the IRA also aims to cut GHG emissions by creating the Methane Emissions Reduction Program, which would amend the Clean Air Act to impose fees on methane emissions from onshore and offshore oil and natural gas facilities that exceed certain defined thresholds
Think about the push for electric vehicles. That's part of the IRA. Those vehicles have to be charged, and that takes infrastructure - and that takes projects. In fact, in today's news I read that California is going to ban the sale of new petrol-based cars by 2035. So, keeping that all in mind, here's one little US$7.5B IRA example (and there are many more in this article from Protocol.com):
- The Biden administration is set to dole out $7.5 billion in funding to states to build out charging infrastructure as part of the bipartisan infrastructure law. That could further spread the decentralized charging model.
See more of these examples in the full article, which highlights the key tech winners from the IRA. The point of this post is that these 'tech winners' will need many project leaders!
Another place in which I also found a connection between the IRA and projects is this site from RK&K - a globlal planning, engineering, and construction firm, which says:
The IRA also includes $60 billion for clean energy manufacturing tax credits and roughly $30 billion in targeted grant and loan programs for states and electric utilities to accelerate the transition to clean electricity. One of the common themes was “hydrogen,” which appeared 65 times, almost six times as more as “biofuel” and more than twice as often as “carbon capture.”
They're referring to green hydrogen.
From the RKK posting:
Experts believe the IRA may be the most important event in the history of green hydrogen, which is hydrogen generated from a renewable energy source such as wind, solar, or hydro. According to a recent report, tax credits offered in the new law would make it cheaper to produce green hydrogen in most parts of the country, than existing sources of grey hydrogen (the most common form), which is more harmful to the environment.
I plan to follow up this post with more about what the legislation means to project management, in particular, this intriguing piece about green hydrogen. So stay tuned if you want to learn about green hydrogen, how it's different from grey hydrogen, and why that shift in color is worth a lot of the other green (dollars! many, many dollars!) to projects and project managers.
Meanwhile, if you are curious as to what the IRA means to you (personally), click here to a look at this recent article from Forbes.
Posted
by
Richard Maltzman
on: August 28, 2022 12:17 AM |
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Comments (5)
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Stéphane Parent
Self Employed / Semi-retired| Leader Maker
Prince Edward Island, Canada
The production of green hydrogen is important. Even more important is a secure method of transporting and storing it--after all we know how flammable it is! "Oh the humanity..."
Bruce Finch
CEO| Bruce Finch Consulting
Layton, Ut, United States
Richard and Dave, I applaud your approach. This is such a partisan issue and you have focused on how it is going to impact our profession. Adding recommendations on how to position oneself to get in on some of the projects. Thank you for your thoughtful approach.
Thanks for raising awarness... may you have a gas project leaders of the future
Welcome good news from the North. Congrats for the initiatives to the Biden Administration and thanks for sharing, Mr. Maltzman. With new winds of progressives next year, in Brazil, we hope this kind of incentives can, finally, arrive in a reinforced manner.
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