Driving clean industrial innovation across the U.S.
Since the Infrastructure Investment and Jobs Act (IIJA) became law more than two years ago, states have accessed and leveraged an unprecedented amount of federal funding for everything from building roads and plugging abandoned oil wells to piloting new types of clean energy and doubling down on grid resilience. As one of the largest public works investments in American history, the IIJA was followed by the Inflation Reduction Act (IRA), and other landmark legislation in a similar timeframe, such as the Energy Act of 2020, the American Rescue Plan Act, and the CHIPS and Science Act of 2022, all investing uniquely in clean energy and infrastructure.
With an incredible amount of funding available, CATF has developed a resource that pulls together and organizes clean industry funding programs to make them more actionable for states. The resource explains the technical pillars to decarbonize the industrial sector and the funding methods (e.g., grants, loans, tax credits) used in federal funding. It also provides a comprehensive list of specific federal funding programs categorized by topic that states can leverage to achieve their emissions reduction goals.
Why the industrial sector?
The industrial sector is unique and complex because industrial sources of emissions vary greatly depending on their wide range of products, production processes, energy sources, and locations. Industries require a range of approaches that must be highly tailored to the industrial subsector, such as cement or steel or chemical manufacturing, and sometimes to a facility. The Department of Energy developed a roadmap for industrial sector decarbonization, organized around four pillars for emissions reduction, which is a helpful frame for policymakers. The four pillars include: (I) energy efficiency, (II) industrial electrification, (III) carbon capture and storage, and (IV) low-carbon fuels, feedstocks, and energy sources. Community capacity building and cross-cutting efforts also are critical for achieving clean industries.
How can states tap into federal funding for the industrial sector?
Federal programs, particularly the IIJA and the IRA, incentivize state action through many different mechanisms. The following list highlights the range of funding methods available for states to take a holistic approach to technology innovation and emissions reductions in the industrial sector.
- Planning. IIJA and IRA provide billions of dollars in planning funds for states. Planning is critical for setting the overarching tone for industrial decarbonization.
- Direct State Grants. Multiple programs offer states direct federal grant funding. States can coordinate with a diverse set of project partners and lead holistic sector projects and programs.
- Private Sector Owners and Operators. Most clean industry funding is for facility owners and operators. States can coordinate with large and small in-state industries to develop comprehensive strategies and support competitive grant applications.
- Tax Credits. Tax credits are a mechanism for states to build public-private partnerships and gain direct funding. Tax credits also create economic opportunity for small and large industrial owners and operators to deploy clean technologies.
- Community Capacity Building. Multiple programs can increase community capacity building around industrial innovation. State leaders can partner to support communities leveraging these funds and maximizing workforce development opportunities.
What’s next for states?
States can lead the charge to move the focus from singular projects and technologies to a broader approach in sector-wide industrial innovation. The more states are equipped with practical resources, the more state officials can leverage the moment of federal funding for the industrial sector. Our resource provides recommendations for states to make the most of federal funding to advance industrial decarbonization in three phases. These phases are summarized below.
- Phase One. Identify priorities, opportunities, and stakeholders to maximize use of federal funds for clean industry in the state.
- Phase Two. Collaborate with state officials, interested stakeholders, and the public on state priorities, grant applications, awards, and cross-cutting issues.
- Phase Three. Implement key learnings from other states while increasing state competitiveness, tracking updates, and communicating wins.
We have already seen unprecedented levels of federal funding deployed and there is significantly more to come. To support this monumental work, CATF has developed similar resources to support state implementation of the Advanced Clean Trucks rule and of heavy-duty vehicles standards. To track programs in a centralized location, CATF also recently launched an Implementation Resource Hub and regularly updates a Clean Transportation Funding Tracker and an Industrial Decarbonization Program Tracker.
CATF commends states for all their progress and will continue to engage at the state and federal level to ensure advancement of industrial decarbonization.
