A year after passage, landmark climate law is creating a ‘different world’ for Alaska renewables

WASHINGTON — A year after the Biden administration’s signature climate bill passed, Alaska renewable energy industry observers say the law is beginning to jump-start new development in the state.

The Inflation Reduction Act was passed in August 2022 and included about $400 billion for climate and energy programs as well as clean energy tax credits. Nationally, groups that advocate for renewable energy say it’s already funding hundreds of new projects. People working in Alaska’s clean energy industry say the law’s financial incentives have the potential to spark much more renewable development in Alaska.

“It’s just a different world than it was a few years ago,” said Isaac Vanderburg, president of Launch Alaska, a nonprofit focused on transitioning Alaska energy.

“We felt like we were, in our organization, just kind of trying to get a couple of projects moving and unstick a couple of projects, but it was very difficult,” he said. “And now it just feels like there are so many projects, so much going on, that our challenge is capacity to respond to opportunities and the projects that are happening.”

Biden administration officials have hit the road in recent weeks to tout the Inflation Reduction Act’s one-year anniversary and other policies they call “Bidenomics.” Transportation Secretary Pete Buttigieg is visiting Alaska in the coming days to highlight the administration’s investments in the state.

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The Inflation Reduction Act includes billions in corporate financial incentives designed to accelerate private investment in clean energy. Developers point out that, importantly, the law allots 10 years to take advantage of its tax credits, eliminating uncertainty for suppliers and investors.

While the project was agreed to before the Inflation Reduction Act was signed into law, Renewable IPP CEO Jenn Miller said her company’s solar project in Houston — the largest in the state — is benefiting from the law’s 10-year timeline and will claim tax incentives. She said the law is also helping shore up future development, like a solar project the company is planning on the Kenai Peninsula.

“Particularly in a state where solar is an immature industry, and it’s in its infancy, and so having those incentives provided for the next 10 years is helping our industry get on its feet,” she said.

The law also comes as a looming natural gas shortage in Cook Inlet adds to interest in renewables for Alaska’s Railbelt, said Chris Rose, executive director of the Renewable Energy Alaska Project.

Curtis Thayer, the executive director of the Alaska Energy Authority, agreed that the Inflation Reduction Act is generating interest in Alaska renewable investments and could make Alaska-based projects that face high construction and shipping costs more viable.

“If there’s anything, whether it be a tax incentive or rebate to help lower that cost, it is beneficial to the state,” he said. “There’s no question about that.”

However, Thayer raised concerns about changing federal guidance regarding the law’s tax credits, and said that funding awarded to Alaska under the law has not yet made it to the state.

Rose said the law is starting to take effect in Alaska and “it’s understandable” that federal agencies have needed time to develop processes to get the money out the door.

“It’s not surprising that it’s taken some time,” Rose said. “... I think that we’re starting to see the flow get greater over the last couple of months.”

Since Biden took office, more than 100 clean energy jobs have been created in Alaska, according to a White House fact sheet. As projects get off the ground, more new jobs could come to Alaska, but developers and Thayer see challenges building a workforce to fill the new positions — a labor shortage is hitting Alaska’s construction industry particularly hard.

“We are competing for workforce, like every other state, but we’re also competing for the way of life in Alaska, so to speak,” Thayer said. “And you’re going to have to find people that want to live and work and be in Alaska.”

The Inflation Reduction Act also includes tax breaks — like a 10% tax write-off of operational costs for domestic companies producing critical minerals — that industry observers have anticipated would spark more interest in Alaska minerals needed to build renewable infrastructure.

In July, the Defense Department announced $37 million to aid a feasibility study for the Graphite One mining project near Nome. The U.S. Geological Survey considers graphite a “critical mineral,” and it is a key element of electric vehicle batteries. Alaska is rich in other critical minerals like lithium and zinc that are important to building solar panels and wind turbines.

Deantha Skibinski, the executive director of the Alaska Miners Association, said while the industry has long been enthusiastic about the state’s mining prospects, the Inflation Reduction Act has spurred more discussion around Alaska critical minerals with government agencies like the Defense and Energy departments and academics.

“It’s been nice to have these conversations with not just ourselves,” Skibinski said last month.

Neither of Alaska’s Republican U.S. senators, Lisa Murkowski and Dan Sullivan, voted for the Inflation Reduction Act, saying it would actually contribute to inflation. Democratic Rep. Mary Peltola was not yet in office.

When the bill passed, several Alaska environmental groups welcomed the law. Alaska Wilderness League’s senior director of policy, Andy Moderow, said the conservation group is still “grateful for the big step forward on addressing climate.”

Yet several Alaska environmental groups have been wary of certain provisions. One detail that irked conservationists was the bill’s revival of a mandatory oil and gas lease sale in Cook Inlet. That sale drew just one bid from Hilcorp Alaska.

Moderow also questioned the Inflation Reduction Act’s investment in Graphite One, which he suggested might not be the best use of funds given the project’s potential impacts to local communities.

“But that’s the outlier,” he said. “I think generally the IRA’s focus and investments make sense to me as making climate progress.”