Underserved Communities Are Benefiting From the Inflation Reduction Act’s Investments in Clean Energy and Technology

In the past year, the United States has witnessed an outpouring of investment into the production and deployment of clean energy. Technologies such as solar, wind, and electric vehicles have the power to transform communities nationwide by creating good jobs, addressing health disparities, and putting the nation on track for a 100 percent clean economy.

New data from Rhodium Group and MIT Center for Energy and Environmental Policy Research (CEEPR) show that some congressional districts have seen billion-dollar surges in clean energy and technology investment since the passage of the Inflation Reduction Act. In particular, congressional districts with levels of college educational attainment and median income below the national average have seen proportionately greater amounts of investment within this time frame—from August 2022 (Q3) to September 2023 (Q3).

Clean technology investment has especially increased for congressional districts with lower educational attainment

Between Q3 2022 and Q3 2023, the majority of actual investment in clean energy technologies went to congressional districts with lower rates of bachelor’s degree attainment than the national average of 35.7 percent. More than $60 billion went to districts where 65 to 75 percent of the population has less than a bachelor’s degree. Clean investment in communities with lower-than-average college educational attainment has flowed across technology types as well.

The jobs created by clean investments are largely a good fit for communities with lower-than-average college educational attainment. For example, about 50 percent of clean energy workers do not have college degrees, yet they can earn competitive wages compared with all jobs across the economy.

The U.S. Bureau of Labor Statistics projects that between 2020 and 2030, the fastest employment growth will involve “green” work, including an estimated 68 percent increase in wind turbine service technicians and a 52 percent increase in solar photovoltaic (PV) installers. The typical entry-level education required for wind turbine technicians is a postsecondary nondegree award; and for solar PV installers, it is a high school diploma or equivalent. Indeed, these sectors provide a range of entry- and mid-level careers that don’t require a bachelor’s degree.

Workers can also advance through their fields into positions typically held by those with bachelor’s and advanced degrees through long-term work-based training opportunities, such as apprenticeships. The Inflation Reduction Act includes prevailing wage and apprenticeship targets that create pathways into good clean energy jobs while diversifying the workforce. Locating clean energy and technology projects in communities with lower levels of educational attainment could present opportunities to improve the accessibility of green jobs and drive equitable workforce development.

Most clean technology investment has flowed to congressional districts with lower median incomes

As shown in a Rhodium Group analysis from November 2023, investment in clean energy, manufacturing, and industry has largely gone to lower-income, underserved communities since the passage of the Inflation Reduction Act. Using the same data on a congressional district level, Center for American Progress analysis found that from Q3 2022 to Q3 2023, nearly 75 percent of actual investment went to congressional districts with median incomes below the national average, which is nearly $75,000.

With the exception of electrolyzers and “other” technology—which includes geothermal, hydroelectric, and biomass—more than half of all investment announcements in each technology type have been located in congressional districts with median incomes below the national average. As Figure 5 shows, for storage, batteries, solar, and wind, more than two-thirds of investment announcements have been in districts with a lower median income than the national average.

Inflation Reduction Act programs and incentives that have boosted investment in clean energy technologies are also intended to fill investment gaps in historically low-income and underserved communities. The Inflation Reduction Act provided targeted funding to reduce air pollution and emissions in low-income and underserved communities through the Greenhouse Gas Reduction Fund as well as the Environmental and Climate Justice Block Grants for community-led projects. These programs are among multiple Inflation Reduction Act funding opportunities that begin to address the environmental, economic, and health disparities communities face.

Actual clean investment has more than doubled for many congressional districts

Since its passage, the Inflation Reduction Act has spurred immense growth in clean investment. Specifically, many congressional districts with lower levels of median income and bachelor’s degree attainment than the national average have seen large increases in clean energy technology investment from the year before the passage of the Inflation Reduction Act (Q4 2021 to Q3 2022) to the year after (Q4 2022 to Q3 2023).

For example, South Carolina’s 6th congressional district (SC-6) saw a 100-fold increase in clean investments, rising from about $29 million in the year before the Inflation Reduction Act’s passage to more than $3.1 billion in the year after. Battery projects in SC-6 took center stage, accounting for 92 percent of the district’s investment, followed by solar (5 percent) and energy storage (3 percent). Similarly, Kentucky’s 2nd congressional district (KY-2) jumped from $63 million to approximately $3 billion in clean investment over the same time period—a nearly 50-fold increase—all of which has gone toward battery projects.

Both of these districts reflect the overall trend of investments going toward districts with lower levels of median income, with SC-6 at about $51,000 and KY-2 at less than $62,000, well below the national average. Likewise, both SC-6 and KY-2 had lower than the national average attainment of bachelor’s degrees, at 29 percent and 24 percent, respectively.

The past year’s surge in clean investment across these congressional districts is indicative of a larger national trend of record-level growth in clean energy projects, including electric vehicle, wind, and solar manufacturing, which totaled $64 billion in Q3 2023. Inflation Reduction Act incentives, such as the Advanced Energy Project Credit (48C), the Advanced Manufacturing Production Tax Credit (45X), and the two Clean Electricity Generation Tax Credits (48 ITC and 45 PTC), have strengthened clean energy financing and transformed the American economy.

Conclusion

Since the Inflation Reduction Act’s passage, clean energy and technology investment has substantially increased throughout the United States and, most significantly, in congressional districts with levels of college educational attainment and median income below the national average. This pattern and intensity of clean energy and technology investment will bring the nation closer to a 100 percent clean energy future and increase economic opportunity in lower-income communities that could benefit most.

The authors would like to thank CAP’s Shannon Baker-Branstetter, Chris Martinez, Rose Khattar, Lily Roberts, Ryan Koronowski, Will Ragland, Leo Banks, and Trevor Higgins, as well as Rhodium Group’s Michael Delgado, for their review and contributions.

Methodology

All investments are rounded in 2022 U.S. dollars. Investments in congressional districts for figures 2, 3, 4, and 5 are calculated by totaling estimated investments in the actual data sets between Q3 2022 and Q3 2023, which captures investment between the passage of the Inflation Reduction Act and September 2023. Figure 3 averages the percentage of residents who have obtained a bachelor’s degree or higher across all districts where a given technology-type project occurs. Fastest-growing congressional districts in Figure 1 include the 20 districts with the largest jump in actual clean investment from Q4 2021 to Q3 2022 and Q4 2022 to Q3 2023. Figure 1 shows cumulative investments from a baseline of Q4 2021. Any districts showing an estimated $0 amount in clean investment for a given quarter indicate that Rhodium Group and MIT CEEPR are not aware of any qualifying facilities that are under construction and meet their criteria.

All investment data are directly provided by Rhodium Group and MIT CEEPR, as part of their tracking through the Clean Investment Monitor (CIM), which is updated quarterly, including reevaluations of data from previous quarters when project details and estimates change. The dataset of announced investment in congressional districts can be downloaded here. CAP’s investment calculations, both announced and actual, are based on data from two of three primary segments within the CIM: “Energy and Industry” and “Manufacturing.” Congressional district data at the “Retail” segment level are not available. The CIM uses current congressional district definitions for all affected facilities and locations and does not track redistricting changes through time. It instead shows a time series of investments that occurred within the current congressional district boundaries. This is the case for all congressional district assignments. For further information on investment categories and definitions, see the CIM methodology.

All demographic data, including national averages, are from the U.S. Census Bureau’s 2022 American Community Survey.