Back in 2021, the U.S. passed the bipartisan Inflation Reduction Act, which promised to create hundreds of thousands of new jobs, spur innovation, and lead to investment opportunities for retirement savers. Now, over two years in, the IRA is creating positive change in the real economy. Some 272 new clean energy projects have been announced in small towns and big cities nationwide, totaling $278 billion in new investments.
Unfortunately, as the 2024 political season heats up, the IRA is being politicized, despite the economic gains it is already providing. As politicians seek to garner attention through fearmongering, we as citizens must take back control of the agenda. The potential for America to be the global leader in the sustainable revolution is too big and strategic to miss.
More importantly, it will unlock the potential for jobs, innovation, and investment that may equal or exceed those created by the industrial and technological revolutions.
The challenge America should be focusing on is how we can transition away from today’s dominant energy and agricultural systems to ones that are equally productive but don’t lead to devastating side effects. Many companies are already making this shift, and it is exciting to see the energy transition accelerating in the U.S. and around the world, as many countries move quickly to seize the economic benefits.
Yet every day, we hear from those commercially or politically tied to the polluting economic system defending the status quo or denying there is any problem. In doing so, they are delaying the inevitable transition, holding back job creation, ceding economic leadership to other economic blocs, and increasing the chances the environment will pass known tipping points and deteriorate even more rapidly, condemning future generations to conflict over resources.
It is time for those halting economic progress to join the rest of us and focus on grasping the potential offered by the green transition.
Job growth
The emerging, more sustainable economy represents an economic boon. Between August 2022 and July 2023, over 170,000 new clean energy jobs were announced or advanced across 44 U.S. states. For example, electric battery and vehicle manufacturing, as well as solar and wind power generation, offer quality jobs with attractive wages, around 45% of which require only a high school diploma.
U.S. leadership
Denial leads to delay and delay is fundamentally un-American. Our innovation and readiness to act are key strategic advantages. From the industrial revolution to the internet revolution, the U.S. has always been at the forefront of developing and deploying new technology.
Taking on the challenge of establishing a less polluting economy will allow the U.S. to take a larger leadership role as these technologies develop and scale. Rather than relinquish this leadership to China, we must continue to invest and innovate. As one of the top two global polluters, the U.S. has the responsibility and ability to make a massive contribution. Investing in scaling clean energy technology is both the right thing to do and the way to build and safeguard our economy.
Investment opportunities
As an asset manager, we know that wealth creation happens through innovation and effective risk management. This transition will underpin a dramatic increase in new business creation, transform existing companies that are prepared to innovate and create a vast range of new goods and services on par with the enormously successful information technology sector.
All transformation is investable–and there is widespread consensus around the scale of the economic opportunities that are emerging as companies address climate change. If those allocating pension funds and privately owned portfolios ignore this moment, they will miss out on enormous value creation and may be abdicating their responsibilities as fiduciaries.
The U.S. has always met challenges with innovative solutions. After all, our nation is symbolized by the eagle, not the ostrich. Combatting pollution and stabilizing the climate is no exception. We must stop conceding the moment to worn-out biases, grievances, and politics.
The transition to a more sustainable economy is already underway. It’s creating jobs, leveraging our country’s innovative spirit, and asserting our global leadership. Smart investors around the world are already positioning their portfolios for the economy of the future.
Ed Farrington is the president of Impax Asset Management.
More must-read commentary published by Fortune:
- Here’s how the U.S., Europe, and China are faring in the post-pandemic race for economic growth
- Working fathers are the new target of microaggressions–and they are worried they could be getting ‘daddy tracked’
- WEF president: ‘It’s time to revitalize trade—and reverse the trend of Slowbalization’
- The anti-DEI movement has gone from fringe to mainstream. Here’s what that means for corporate America
The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.
