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Author Veronika Akhmadieva

Senior Economist View profile
Aerial shot of a production plant

The Biden administration is committed to reducing GHG emissions to 50-52% below 2005 levels by 2030 and has taken multiple steps towards achieving this goal. President Biden’s green economic plan includes:

  • Infrastructure Investment and Jobs Act (IIJA) or Bipartisan Infrastructure Law (BIL)
  • Inflation Reduction Act (IRA)
  • CHIPS and Science Act

According to the White House, this three-part economic plan has driven over $300 billion in private sector investments into transforming the US industrial sector by advancing it, making it cleaner and more competitive. This includes moving towards cleaner energy solutions, growing the electric vehicles market, expanding and bringing home semiconductor chips and advanced batteries production. Examples include $15 billion funding for the Rebuilding American Infrastructure with Sustainability and Equity (RAISE) Discretionary Grant program under the IIJA, Volkswagen’s new battery plant which qualified for the $35 per kWh (around $9.7 billion) in production subsidies under the IRA and a $40 billion investment by Micron in memory chip manufacturing spurred by the passage of the CHIPS Act.

Under the Inflation Reduction Act $12 billion will be dedicated to carbon capture, utilisation and storage investment. More recently, in June this year Biden’s administration announced that another $135 million were to go towards 40 projects focused on reducing carbon-dioxide emissions from industrial production. Between these two major spendings, there was another step made towards a greener US industrial sector: the $6.3 billion Industrial Demonstrations Program (IDP).

When it comes to reducing the nation’s carbon footprint, the focus on industrial production is unsurprising for two reasons. First, industrial production tends to be energy intensive and on average responsible for nearly one quarter of emissions in the US. Second, it is among the hardest to decarbonise sectors and given how complicated production and construction processes are, a multidimensional approach is required here.

The Industrial Demonstrations Program was announced in March 2023 by the US Department of Energy, Office of Clean Energy Demonstrations (DOE). The funding under this program will be dedicated to innovative commercial decarbonisation technologies aimed at making US industry greener. Innovation is the key word here: the program seeks to fund first- or early-of-a-kind decarbonisation technologies which have a clear way to be implemented in a commercial setting.

The likely recipients of this funding opportunity will be technology developers, industry, manufacturers, engineering and construction firms among other domestic entities. Technologies that would be considered under this program can be either aimed at reducing emissions from point sources or capturing CO2 from the atmosphere. In limited circumstances, even foreign entities may get the award. Within the metals sector the most obvious candidates will be those operating in high-carbon-emitting production and where decarbonisation technologies can have the strongest impact (so-called ‘hard-to-abate’ sectors), such as steel, iron, and aluminium producers.

The award-winning projects will adhere to a clear four-stage structure (Figure 1), will have a maximum expected project period of 7 to 12 years, and will offer the Big 4:

Four pillars with deep decarbonisation, timeliness, market viability and community benefits

The funding will be allocated through grants, cooperative agreements and similar structures. By the DOE’s approximations, about 65 projects will be funded under this program with a focus on technologies used in high GHG-emitting industries.

In our recent insight we discuss in greater detail what this project means for high GHG-emitting industries, such as steel and aluminum industries, and how the IDP fits in a broader agenda of decarbonising industrial production in the United States.

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Author Veronika Akhmadieva

Senior Economist View profile