This article is sponsored by Environmental Defense Fund.
The Inflation Reduction Act (IRA) is a major win for American businesses, offering companies billions of dollars in tax credits, loans and other incentives to accelerate progress toward environmental sustainability, and it is destined to be transformative — as long as those incentives are implemented efficiently and effectively.
In this series of articles, business leaders from top companies will share how they are implementing IRA provisions and what advice they would give to other companies eager to capitalize on all the IRA has to offer.
Today, we have Roger Martella, chief sustainability officer at GE and vice president of Government Affairs and Sustainability at GE Vernova. Prior to GE, Martella co-led Sidley Austin’s global environmental law and climate change practices, and he served as General Counsel of the U.S. Environmental Protection Agency under President George W. Bush. He also teaches a first-of-its-kind course on International Environmental Law and Justice at Howard University Law School.
Victoria Mills: How has passage of the IRA changed the business context for GE?
Roger Martella: The IRA has been a game-changer for both GE and our customers, providing greater near-term and long-term demand certainty for cleaner energy investments. We are already seeing the market response. In the first quarter of 2023, we saw a tripling of U.S. onshore wind orders compared to last year. It also has delivered sharper focus on breakthrough investments such as hydrogen and carbon capture as well as small modular reactors.
We recently announced that GE Vernova will invest $50 million at its Schenectady, New York facility and hire approximately 200 new full-time employees, including skilled union operators, manufacturing engineers and front-line leadership, to establish a new manufacturing assembly line for its onshore wind business. We were able to announce this project due to the certainty of the IRA and the domestic content guidance.
Mills: Why was GE such a forceful advocate for the IRA? In which ways did you weigh in?
Martella: GE strongly supported the energy tax credits in the IRA to advance America’s decarbonization and energy security efforts and ensure continued U.S. leadership in energy manufacturing and jobs — both today and in the future.
In the summer of 2022, we launched a grassroots public advocacy campaign that delivered nearly 1,300 letters to members of Congress representing 34 states. The campaign urged Congress and the Biden administration to pass a comprehensive package of clean energy tax credits, including a wind production tax credit, a tax credit for carbon sequestration and tax credits to support diverse generation sources, such as wind, solar and nuclear.
GE executives also contributed to the public dialogue on how to achieve climate goals for the energy sector through strong policy, technology and investments. For example, GE’s chairman and CEO, Larry Culp, joined a discussion at the Milken Institute 2022 Global Conference, where he was clear we “need to have that policy certainty” to help accelerate the energy transition and promote energy security.
Mills: From which IRA incentives does GE expect to benefit?
Martella: The IRA includes multiple clean energy tax credits that will reduce emissions, promote U.S. energy security and increase jobs and investment. This chart shows how GE Vernova’s portfolio of energy businesses across wind, gas, hydro, storage, nuclear and grid are positioned to benefit from the legislation. The IRA also includes a tax credit for Sustainable Aviation Fuel (SAF), which is expected to help lower the cost and incentivize production of SAF for the aviation industry.
With the opportunities to benefit from both the wind tax credits and the advanced manufacturing tax credit, we recently announced a plan to construct two new manufacturing facilities in New York. Our proposal includes specific commitments to hire and train new employees from disadvantaged communities, including an outreach program called Pathways to Wind to provide historically under-served communities exposure, education and training in the emerging offshore wind industry.
The IRA also promotes the breakthrough technologies that GE is investing in to achieve decarbonization and energy security goals in the future, including nuclear, hydrogen, and carbon capture and sequestration. We also see opportunities to grow hydropower in the U.S., including by increasing the capacity of existing facilities.
For the aviation industry, the widespread use of SAF has the potential to dramatically reduce fuel lifecycle carbon emissions by up to 80 percent, compared to jet fuel produced from petroleum. GE Aerospace has been actively involved in assessing and qualifying SAF since 2007, and all GE and partner engines in service today — and in the future — can operate with approved SAF. The IRA’s SAF tax credit will help increase production and lower the costs of these fuels.
Mills: How does the IRA support progress toward GE’s climate goals?
Martella: In 2021, we set an ambition to reach net zero by 2050 for the Scope 3 emissions associated with the use of our sold products. We are committed to helping advance the energy and aviation sectors’ paths toward net zero by delivering state-of-the-art technology today to make progress while innovating the breakthrough technologies for tomorrow.
The IRA creates the right policies at the right time to drive manufacturing, innovation and delivery of the technology needed to realize these goals across a diverse portfolio of technologies that are key to future success.
Mills: What needs to happen to make sure the IRA delivers on its potential?
Martella: We see this landmark legislation as presenting a unique opportunity for GE and other companies to make significant and continued progress toward the goals of decarbonization and energy security.
We also believe swift guidance from agencies on implementation is critical to ensure that the IRA’s goals can be achieved at the earliest opportunity. The recent release of domestic content guidance for renewable energy tax credits, for example, gave GE Vernova the clarity we needed to make a long-term investment in U.S. manufacturing to support onshore wind.
We look forward to partnering with the administration on other guidance needed to unlock investments, including the advanced manufacturing tax credit, hydropower, hydrogen, nuclear and others.
We also are steadfast that the types of policies in the IRA should not just yield benefits in the United States. To truly solve climate change and global energy security, we need to share the lessons from the IRA globally and ensure the entire world — including emerging economies — is invested in the new energy economy.
Mills: What would you like to see other companies doing now regarding the IRA? What’s one piece of advice you’d like to share?
Martella: We are in a transformative era of action on climate change, driven in large part by growing partnership between the private and public sectors. Increasingly, government is relying on businesses to address climate change and energy security through innovation and technology. In turn, industry is rising to solve the world’s most pressing challenges. The IRA is one of the best manifestations of this type of partnership where industry leads the energy transition and government enables it, as U.S. Secretary of Energy Jennifer Granholm has said.
I would like to see companies across sectors seize the opportunity we have right now to secure America’s leadership in the clean energy transition. That means taking advantage of the historic incentives and investments in the IRA, delivering the economic and environmental results that the law makes possible, and partnering to achieve more together than any one company can do alone.