By David Lauder
ELIZABETHTOWN, Ky. (Reuters) – Treasury Secretary Janet Yellen said on Wednesday clean energy investment in parts of the U.S. historically reliant on fossil fuels had doubled to $4.5 billion a month due to tax credits from the Biden administration, targeting such communities.
Yellen said in remarks in downtown Kentucky that the Treasury Department’s study, using Rhodium Group data, also showed that clean energy investments in other communities rose to $3.5 billion a month — an increase of $1 billion – thanks to the stimulus in the Inflation Reduction Act of 2022 (IRA).
Yellen is visiting Kentucky, a heavily Republican state that Democratic President Joe Biden is not expected to win in the Nov. 5 U.S. election, to promote the state’s growing supply chain for electric vehicle (EV) battery manufacturing, which Biden has touted in his State of the Union Address to Congress last week.
“We’ve seen investment grow significantly. Companies have announced nearly $650 billion in clean energy and manufacturing investments across the country since the administration began,” Yellen said.
Yellen is visiting Advanced Nano Products, a South Korean maker of battery materials that has invested $49 million in a new factory in Elizabethtown, Kentucky, that will employ about 100 workers once production begins in May.
The facility will supply carbon nanomaterials to the $5.8 billion BlueOval SK battery manufacturing complex being built a few miles south by Ford Motor Co and South Korea’s SK Group. The plant will eventually employ more than 5,000 workers.
Japan’s AESC is also building a $2 billion battery factory in Bowling Green, Kentucky, which will employ 2,000 people.
All of these facilities benefit from IRA Clean Energy Production Tax Credits, which provide up to 30% of investment costs, with a 10% bonus if located in a community historically dependent on fossil fuel energy or one that is in unequal economic situation. They will also take advantage of consumer EV tax credits of up to $7,500 when purchasing vehicles that meet US production and battery content requirements.
Kentucky accounts for just under 5 percent of U.S. coal production in 2022, ranking it fifth among fossil fuel-producing states, according to the U.S. Energy Information Administration.
The right-to-work state has garnered more than $11.6 billion in EV-related investment, in part because it sits at the center of a growing Mid-South auto manufacturing belt that stretches from Georgia to Texas. BlueOval SK also benefited from a $9.2 billion loan from the Ministry of Energy.
OBSTACLES IN SALES
The investment has faced some headwinds, including a slowdown in EV sales in the U.S. and Ford’s decision to freeze $12 billion in EV investment last year, including a delay at one of its two BlueOval SK plants in Glendale, Kentucky.
Yellen said in an interview with Fox Business that while sales may not have met rosy expectations over the past year, consumers will want electric cars as they become more affordable and more charging stations are built, in part with federal infrastructure funding.
“The future of electric vehicles is extremely bright in the United States. More subsidies will come into play to help make these cars affordable, and over time their costs will come down.”
Yellen said the Treasury Department will take additional steps to encourage leaders and businesses in more than 150 high-poverty U.S. cities to take advantage of tax credits to attract investment.
(Reporting by David Lauder; Editing by Paul Simao and Mark Heinrich)
