Chart: US clean energy investment is soaring thanks to climate law

Exactly two years ago today, President Joe Biden signed the Inflation Reduction Act, establishing a wide array of clean energy programs meant to supercharge spending on climate solutions.

Investment in clean energy projects — from solar manufacturing facilities to home batteries to hydrogen hubs — has taken off ever since, rising to record heights in the first half of this year.

Across the first six months of 2024, U.S. cleantech investment hit $147 billion, per new data from the Clean Investment Monitor, a joint project from Rhodium Group and the MIT Center for Energy and Environmental Policy Research. That’s a more than 30 percent jump from the first half of 2023. The report measures actual investment — not announcements or plans — from both public and private sources.

This growth in cleantech investment looks impressive enough on a year-over-year basis, but compared with the pre–Inflation Reduction Act era, the change is staggering: In all of 2021, the year before the climate law was passed, investors poured $141 billion into the cleantech world. That’s less than what was invested in the first half of this year alone. In the whole of 2020, just $115 billion was spent.

The largest segment of spending in the first half of this year was retail — Clean Investment Monitor’s category for clean energy purchases made by individual households and businesses. During those six months, that group spent a collective $64 billion to outfit their buildings with heat pumps, slap solar panels on their roofs, and swap their gas-guzzling cars with EVs, among other steps incentivized by the climate law.

Energy and industry — an expansive category comprising everything from new wind turbine installations to green hydrogen facilities — saw the next-largest amount of investment in the first half of the year at $47 billion.

The smallest but fastest-growing sector was clean energy manufacturing. Investors doled out $36 billion in the first half of 2024 to erect new cleantech factories across the U.S., with the investment heavily concentrated in the Southeast and Rust Belt states. Battery factories accounted for most of this spending.

Private investors are committing most of this cash; for every $1 the government spends on clean energy, $5 to $6 is spent by companies and businesses. That’s due to the design of the Inflation Reduction Act, which dangles carrot after carrot in front of companies and consumers, with the expectation that the discounts on offer will prove too good to pass up. Already, as both this report and initial data on the law’s tax credits shows, that’s proving to be the case.