US unveils clean energy subsidy rules to boost green job wages

By Editor


The Joe Biden administration has released the final regulations for new clean energy subsidies, designed to align job quality and wages in green industries with those in traditional oil and gas sectors. This move aims to support President Joe Biden’s vision that combating climate change will generate millions of well-paying jobs with substantial benefits.

White House says America has unleashed a clean energy manufacturing and deployment boom that has attracted hundreds of billions of dollars in private sector investment and created more than 270,000 new good-paying and union clean energy jobs.

As part of his broader economic strategy, Joe Biden is promoting these policies ahead of the upcoming November general election, where he is set for a rematch with former President Donald Trump, Reuters news report said. The newly announced guidelines target companies seeking to claim tax credits linked to job quality, underscoring Biden’s commitment to climate action and economic growth, Reuters news report said.

The Inflation Reduction Act (IRA), enacted in 2022, earmarks an estimated $370 billion for subsidies in solar, wind, and electric vehicle sectors.

White House says the Inflation Reduction Act could create 1.5 million additional jobs over the next decade. The provisions announced today will ensure that those jobs building wind farms, installing solar panels, and constructing hydrogen and carbon capture facilities will be good-paying and support proven pathways into the clean energy industry.

The below chart prepared by PayScale shows renewable energy / renewable power jobs by salary in the United States.

Wage in clean energy US
@ PayScale

According to the Treasury Department’s rules, companies that adhere to prevailing wage standards and employ apprentices for projects claiming IRA tax credits will benefit from a five-fold increase in the base credit rate, from 6 percent to 30 percent. These requirements have been highly anticipated by industry developers.

White House says clean energy projects that meet the requirements of these final rules will receive a five-fold increase for clean energy tax credits for deployment of wind, solar, nuclear, hydrogen, and other clean energy technologies.

This provision aims to incentivize companies to improve pay structures in the renewable energy sector, which historically lags behind industries such as nuclear energy, natural gas, and coal. The main aim is to offer better wage to workers for construction, alteration, and repair of clean energy projects and to hire registered apprentices to earn while they learn by working on those projects.

Sean McGarvey, president of the North America’s Building Trades Unions (NABTU), highlighted the disparity, noting, “In the fossil fuel industry, our experience over the last 100 years is that they pay top wages and fringe benefits. This has not been the case in renewable industries. These new rules will result in significant pay increases for current workers and attract hundreds of thousands of new entrants to the industry, offering middle-class, family-sustaining wages with good health care and retirement benefits.”

The administration is also encouraging companies to adopt project labor agreements, which establish wage and employment terms between trade unions and contractors for specific projects, to ensure compliance with the new rules. This aligns with Biden’s support for unions, a key constituency for his administration.

The Treasury Department has committed substantial resources from the Internal Revenue Service to promote and enforce adherence to these new regulations, ensuring that the intended benefits are realized across the clean energy sector.

Baburajan Kizhakedath

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