"4000 Trillion Won Gold Rush"... US Rural Towns Transformed by Inflation Reduction Act

On the 23rd (local time), The Wall Street Journal (WSJ) reported that local cities in the United States are rushing to invest significant resources to benefit from the Inflation Reduction Act (IRA) of the Joe Biden administration, joining the so-called "3 trillion dollar (approximately 4,000 trillion won) climate gold rush."

According to the report, the estimated private and public sector spending expected over the next decade due to the IRA, which passed Congress in August last year, could reach up to 3 trillion dollars. The Biden administration decided to provide large-scale subsidies through the federal law called IRA to compete with China in sectors such as clean energy and to foster related domestic industries. The American Clean Energy Association has calculated that investment announcements related to renewable energy and battery storage have reached 150 billion dollars in the eight months following the bill's passage.

Philip Jordan, Vice President of BW Research, a U.S. research organization, evaluated, "This is a massive and unprecedented investment," adding, "It will reshape regional economies and bring new vitality."

[Image source=AP Yonhap News]

Since the law's passage, local cities across the U.S. have been moving quickly to attract investments by utilizing the subsidies.

A representative example is Colleton County in South Carolina. After the IRA passed, in December last year, Colleton County secured an investment of 279 million dollars from the Turkish company Controlmatic Technology. The company initially planned to build its first factory in Turkey and a second factory in Europe or the Middle East but decided to invest in the U.S. due to the introduction of the IRA. It is reported that the company expects tax benefits worth 1 billion dollars over the next decade from the U.S.

After deciding to build a factory in the U.S., Controlmatic surveyed over 200 sites across 20 states, with Arizona, Oklahoma, and Colleton County in South Carolina emerging as candidates. Subsequently, Colleton County decided to offer tax incentives worth 127 million dollars to actively attract the investment. WSJ described Colleton County as a quiet rural town with little known beyond hunting and fishing.

Controlmatic plans to produce batteries with an annual capacity of 3 gigawatts at the U.S. factory in Colleton County. This capacity is enough to power 540,000 households per hour, and WSJ introduced that it will create 575 jobs. At the groundbreaking ceremony in February, Steven Murdock, Chairman of the Colleton County Council, said, "Honestly, I don't know what a gigawatt is," but added, "I do know what an investment of 279 million dollars will mean for our county and what 575 jobs will mean for our community."

Besides this, various states and cities across the U.S. are actively moving to attract factory investments. According to WSJ citing the subsidy tracking organization Good Jobs First, the state providing the largest subsidies for electric vehicle or battery-related manufacturing facilities is Georgia, with 3.62 billion dollars (as of last October). It was followed by North Carolina (2.12 billion dollars), Michigan (2.06 billion dollars), and Nevada (1.29 billion dollars).

WSJ described the spending on subsidies under the IRA as "the largest industrial promotion policy involving tax expenditures since President Franklin Roosevelt's New Deal," and stated, "If successful, it could create millions of jobs, completely transform the national economy, and pull total clean energy-related policies up to 3 trillion dollars over the next decade."

This content was produced with the assistance of AI translation services.