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.
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.
Edwin is a reporter and producer in North Tonawanda, New York. He’s previously reported for the Niagara Gazette and the Ithaca Times. Edwin got an early start in radio interning for WBFO-88.7FM, NPR’s Buffalo affiliate. In 2018, he graduated from SUNY Buffalo State College with a B.A. in Journalism, and in 2022, graduated from Syracuse University with an M.S. in Communications.