The first anniversary of the controversial Inflation Reduction Act (IRA) recently passed. The law focuses on healthcare and taxes, but mostly energy, by encouraging businesses and people to cut their greenhouse gas emissions through monetary incentives. All of Wyoming’s representatives in Washington D.C. voted against it. So far, a great majority of red states are taking advantage of the money from the act. And a recent analysis by the think tank RMI shows that Wyoming could get more than seven billion dollars from the climate-related provisions of the IRA if it took full advantage of it. Wyoming Public Radio’s Kamila Kudelska spoke with Inside Climate News reporter Marianne Lavelle on her reporting of how the state could get that money and why so many red states are taking advantage of it.
Editor’s note: This interview has been edited for clarity and length.
Marianne Lavelle: One of the reasons is because the law was built especially to help fossil fuel-dependent states make this energy transition. And that's why Wyoming kind of rises to the top as far as states that potentially could benefit.
Kamila Kudelska: Why do you think it's such a partisan issue? It seems to offer incentives for both fossil fuel and renewable industries, for both Democrat and Republican-led states, but it's still really polarizing. So why do you think that?
ML: There's just no question that fossil fuel money goes in a lopsided way to Republicans. I think that it becomes? the Republican platform to support continued production of fossil fuels. However, the money from the Inflation Reduction Act that is going to Republican states is primarily for things like electric battery manufacturing and electric car manufacturing. You're seeing that happen in this whole area that people are starting to call the Battery Belt, going from Ohio, down through Georgia [and] South Carolina. It's areas that had a lot of auto manufacturing before. And it made logical sense for the industry to really build up this new sort of manufacturing in those areas. So that's what we've seen so far.
For Wyoming, though, it's all about potential. It's all about what direction Wyoming is going to go because we're not seeing those big announcements of factories that Georgia has seen. But for Wyoming, one of the things that really could make a difference in Wyoming is wind energy production, because Wyoming has just world class wind energy potential. But it has not really realized that potential for a lot of different reasons. But the Inflation Reduction Act could help the state realize that potential.
KK: Your reporting focused on the fact that Wyoming has a lot of potential to reap more than $7 billion from the climate-related provisions of the IRA. And that's according to an analysis by the think tank RMI. Can you go into a little bit about how they found that number?
ML: So what they did was an analysis based on things like wind energy potential if Wyoming did the kind of build out, and all of the country really did the kind of build out, of renewable energy that's necessary to meet our goals under the Paris Accord, which is basically a 50 percent reduction in fossil fuel emissions by 2030. If Wyoming did that kind of build out, these are the levels of tax credits that could be flowing to the state. And the tax credits are… that $7 billion is only a fraction of what Wyoming could make.
Because the idea is that once you build a lot of renewable energy, there are a lot of companies that want to locate where they've made commitments to go 100 percent clean energy. And Wyoming then becomes a perfect place for them to locate. And that's kind of what the Inflation Reduction Act’s approach was meant to do for fossil fuel-dependent states like Wyoming - not just take away what they've relied on and what has been a good living for people for a long time, but to create something new, and a new attraction for Wyoming could be that it is a top renewable energy state.
KK: What does full advantage of the IRA actually mean for Wyoming?
ML: The National Renewable Energy Laboratory is talking about a five fold increase in wind energy in Wyoming by 2030. Now, that is a lot of new wind power, there's bound to be local resistance.
And if it is sited in the wrong place, it will just cause people to turn against it. For some people, this is about their views. Wind energy is very visible compared to oil, gas, and coal. The energy from underground is not as visible even though the damage it is doing is much greater when you consider climate change.
There's also a really legitimate concern in Wyoming about the sensitive landscapes that Wyoming has, and the sagebrush steppe ecosystem is a really threatened, fragile landscape. It's not just about saving the sage grouse, but the ecosystem. So there has to be a lot of thought about how renewable energy and the transmission lines are built out.
KK: It's been a year since the IRA was passed. So how has the state already taken advantage of it?
ML: The projects have been announced before the IRA. But what you're seeing is the projects, the people who are involved in the projects, are talking about expanding what they're doing. TerraPower, which is the Bill Gates project on advanced nuclear energy, they're now studying, doing maybe five more of these nuclear projects.
Certainly carbon capture, which is something Wyoming has wanted to be a leader in for years. And the utilities really haven't seen the economic case for it, but the Inflation Reduction Act makes it much more financially viable. This Project Bison, which is, I think, one of the, the largest direct air [carbon] capture efforts and that's a really new sort of technology, that was announced right after the IRA. Certainly they hope to take advantage of these credits. So you're starting to see a lot of this is just at its beginning.
KK: And you mentioned some of the challenges already, like the sage grouse habitat and sagebrush steppe ecosystem, but any other challenges that Wyoming faces that you would want to talk about?
ML: Well, Wyoming is very dependent on fossil fuel revenue. The state's budget is 40 - 50 percent based on severance taxes and other sorts of fossil fuel revenue. It's really impossible for the state to tax renewable energy the way it taxed coal, for instance. If Wyoming sets its wind power tax too high, there are other states that wind developers could go to. It’s not the same for coal. There's nowhere else that has Wyoming's coal resources. So wind is competitive in a way [that] if demand for oil, for coal, for natural gas falls, the way that the IRA means for it to fall, then Wyoming's revenue from fossil fuel will fall as well.
This is kind of an early point where Wyoming can look at some of the things it's done in the past. It does have a fund that is put together and that it could kind of use to help it transition. I think those discussions really haven't moved forward to the point where they need to [be] if there is a true clean energy transition in Wyoming.
