September 2, 2022 Step Aside California, the South Could Become America’s Green Hub

Wind turbines are viewed at a wind farm on January 21, 2016 in Colorado City, Texas. Credit: Spencer Platt/Getty Images
Wind turbines are viewed at a wind farm on January 21, 2016 in Colorado City, Texas. Credit: Spencer Platt/Getty Images

Republicans have hardly been vocal supporters of renewable energy or electric vehicles. Yet the U.S. South, a region where the politics lean red, is now primed to greatly benefit from the broader effort to turn America’s economy green.

While Texas Sen. Ted Cruz called it “a gift to radical environmentalists,” and Tennessee Rep. Chuck Fleischmann said it was “a continuation of Democrats’ radical policies” that have “decimated our economy,” both of their states will likely receive billions in climate-related spending from the Inflation Reduction Act. The Democrats’ $739 billion spending package and signature climate legislation, which President Joe Biden signed into law last month, dedicates roughly $370 billion to fighting climate change, largely through federal tax incentives for electric vehicles, clean electricity and building efficiency. 

Yet despite not a single GOP lawmaker voting for the legislation, some analysts now think the South could soon become America’s new green hub, boosted by a fresh injection of federal dollars aimed at expanding the domestic manufacturing of batteries, solar panels and a host of other key components for the clean energy transition.

Several states in the region already lead the nation when it comes to renewable energy development and electric vehicle production. Last year, Texas came in first for new solar and wind energy installations, surpassing even California, with Oklahoma coming in third. Wind energy alone made up a whopping 41 percent of Oklahoma’s total electricity generation in 2021, according to the Department of Energy.

Southeast states in particular have seen a boom in clean energy industry activity. North Carolina, Tennessee, Kentucky, Georgia and Alabama, are all producing—or will soon be producing—large quantities of electric vehicle parts, including the batteries that power them. Some experts believe that industry, which has already gained a solid footing in the region, will only grow further as federal dollars begin flowing to states and consumers.

“The Southeast by far is becoming the EV hub of America,” Bob Keefe, executive director of the nonpartisan clean energy advocacy group E2, told CNN this week. “It’s going to be harder for red states to say clean energy jobs are bogus and that it’s something for California when it’s something that’s happening in their backyards.”

Besides requiring that electric vehicles be made with parts manufactured in the U.S. to qualify for EV tax credits, the spending bill also provides billions in tax incentives to boost clean energy production in the U.S. That includes $10 billion in tax credits for new solar manufacturing facilities and $30 billion for expanding production of clean energy parts, as well as the processing of minerals needed for long-life batteries.

Those incentives appear to be working. Several companies, including major automaker Honda and global battery manufacturer LG, have announced plans in recent weeks to expand their operations in the U.S., with a focus on Southeast states.

In mid-August, shortly after the House passed the spending bill and sent it to Biden’s desk, Korea-based solar panel manufacturer Qcells said the legislation could allow it to expand its U.S. operations even further than its current commitments. In May, the company announced it was spending $171 million to grow its facilities in Georgia, a move expected to bring the Republican-led state nearly 500 new jobs.

First Solar, another major solar panel manufacturer, took an even stronger position. The company announced Tuesday that it would spend $1.2 billion to grow its U.S. presence, including by building a new factory in the Southeast, largely because of the new law. The plan would create nearly 1,000 jobs, it added, though a portion of those would go to its current operations in the Midwest.

But the biggest winner in the region could be Kentucky. Envision AESC, a major battery producer owned by Japanese automaker Nissan, broke ground this week on its new $2 billion plant in the Bluegrass State. The company said the facility, once complete, will be able to manufacture up to 300,000 EV batteries per year and employ as many as 2,000 people full time.

“In April, when Envision AESC announced plans to locate in the commonwealth, it solidified Kentucky’s place as the leader in the emerging electric vehicle sector,” Kentucky Gov. Andy Beshear said in a Tuesday press release. “Today’s groundbreaking signifies another major step forward for Envision and our state.”

While Beshear is a Democrat, the state has voted for a Republican president since 2000, and Beshear’s popularity as governor has frustrated many GOP leaders. The fact that Kentucky Sen. Mitch McConnell—an influential Republican powerbroker and former Senate Majority Leader—only admitted in 2019 that he believes human-climate change exists, speaks volumes to the state’s right-wing political leanings.

As governor, Beshear has refrained from talking about climate change, even while his state reels from its deadly consequences. But his vision for Kentucky as a clean energy leader could signal a broader, albeit incremental, ideological shift in the state.

Beshear “is very boxed in politically, with a Republican Supermajority running the state’s General Assembly,” James Bruggers, ICN’s Southeast reporter, told me. “But it is clear he’s very proud to talk about the rising EV battery industry in the state as he heads into his reelection vote next year.”

In some ways, the recent investments in the region could also mark a new era for American automaking in general, potentially foreshadowing a bigger role for the U.S. in an industry that largely migrated overseas as car assemblies became increasingly automated and as an emerging global economy complicated domestic profit margins.

To Bruggers, who lives in Louisville, Kentucky, it’s all a continuation of the state’s “very long automotive legacy,” starting with Ford building Model T bodies in the city as far back as 1913. “If you think about it, there are a lot of automobile assembly plants in the region,” he said. “If cars are going to be electric, and that requires new technology and new kinds of factories, it makes sense they’d be located nearby.”

That’s it this week for Today’s Climate. The newsletter will take a break next week as I catch some much needed R & R and enjoy an extended Labor Day weekend. But I’ll be back in your inbox the following week. Thanks for reading.

Today’s Indicator

6 percent

That’s how much of the share of total U.S. car sales in August were electric vehicles, about double the amount the same time last year, according to analytics firm IHS Markit. Some analysts believe that when EV sales reached 5 percent, it marked a tipping point in consumer adoption.