U.S. Debt Default Would Impact NY Clean-Energy Investments
Tuesday, May 30, 2023
The looming U.S. debt default could affect a host of programs across the country - and in New York, the list includes clean-energy investments.
Treasury Secretary Janet Yellen has said the U.S. has until June 5 before a default would occur. In the meantime, states like New York have been ramping up their clean-energy infrastructure with federal Inflation Reduction Act funds.
A Climate Power report finds the IRA created 950 clean-energy jobs in New York from more than $560 million in funding.
Zander Bischof, head of Regulatory & Government Affairs at MN8 Energy, described how a default could jeopardize the future of these investments.
"It would put pressure on clean energy investment through a few mechanisms," said Bischof. "I think, firstly, it would drive up interest rates, and therefore the financing costs of clean energy assets - which are generally pretty capital intensive. We're talking about most of the costs being to get the steel in the ground, and then very low ongoing operating - and then from there, fuel costs."
He added that a default also could devalue the U.S. dollar, leading to higher costs for these projects.
This isn't the first time the IRA has been threatened. A bill to repeal it appears to be stuck in the U.S. House.
The Joint Economic Committee estimates that repealing the IRA would lead to energy costs of up to $300 a year higher per household.
Some experts feel the alternative isn't much better. House Republicans' "Limit, Save, and Grow Act" would raise the debt ceiling, but slash clean-energy funding.
Sandra Purohit - director of Federal Advocacy at the advocacy group E2 - said she feels after so much progress, it would be a step in the wrong direction.
"If you avoid default under this plan," said Purohit, "you would do so by revoking incentives that are making a huge and positive impact on our economy."
Both President Joe Biden and House Speaker Kevin McCarthy have said they're confident a deal will be reached as negotiations continued over the weekend - although others see it as an impasse that's unlikely to be settled by the deadline.
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