As 2022 winds down and we look back, the biggest story (other than the war in Ukraine) was the passage of the most historic climate law in US history, the Inflation Reduction Act (Act). The new law aims to transform the US economy to align with the global urgency of taking action to mitigate the effects of climate change. The Act helps the US focus on reducing greenhouse gas emissions by 50% by 2030 with a longer-term goal of net zero emissions by 2050, but also, most importantly, it takes a no-regrets approach to the Act’s impact on society. A significant portion of the federal investments target clean energy and energy efficiency projects in historically underserved communities (especially fossil-based energy communities in need of transition), and with a “shared prosperity” lens committed to equity, environmental justice, and a revitalized American-based clean energy manufacturing presence.
While the law came into effect in August, the real work has been going on ever since. With an enormous $370 billion of federal investments in the pipeline, federal agencies and the White House recognized the need for guidance to help get the money in the right hands so it published, Building a Clean Energy Economy: A Guidebook to the Inflation Reduction Act’s Investments in Clean Energy and Climate Action. The Guidebook has a handy table of contents to help industries, communities, governments, tribes, and project stakeholders easily identify and access the benefits of each of the 135 funded programs.
Zooming out for a moment on this historic opportunity for stakeholders in the design, construction, and real estate industries, we recognize what this infusion of federal investment means in the world of risk. Simply put, more projects means more risk.
Talent shortages—professional and skilled labor—remain pervasive and it’s no mystery that mistakes are made when there’s an imbalance between resources, capacity, and demand. Overlay this ongoing challenge with the reality that the federal government is asking industries to approach all projects with a very different mindset of prioritizing climate mitigation and resiliency at all costs. This means a lot of change, and a lot of new thinking and integration of new, and sometimes untested, technologies, which also means a lot of learning and the need for renewed risk management awareness.
As is always the case, businesses that tackle the opportunity early on without losing sight of the risks will have a distinct competitive advantage in 2023.