Money & The Economy

Biden’s ‘Green’ Manufacturing Plan Is Running Into a Huge Problem

President Joe Biden’s push to boost “green” U.S. manufacturing is facing headwinds from a lack of available real estate, Reuters reported Thursday, citing development experts and local government officials.

Roughly half of all megasite projects — typically defined as large factories spanning more than 1,000 acres — announced since 2004 were announced in the past five years, Reuters reported. While the U.S. has a significant amount of available land, most of it is not ready for the large multibillion-dollar projects companies are looking to develop before tax credits under Biden’s signature climate law, the Inflation Reduction Act, begin to phase out at the end of the decade.

A White House official characterized the situation as a “high-class problem” to Reuters.

“Folks are finding places to build,” said the official. “I don’t think I’ve heard of one company abandoning plans to go forward because they’re not able to find a site.”

However, Gregg Wassmandorf, senior managing director of global strategy consulting at Newmark Group, estimates that there are fewer than two dozen megasites available in the U.S., many of which may not be ready for development, according to Reuters.

“Every company, of course, wants shovel-ready megasites,” Christopher Chung, CEO of the Economic Development Partnership of North Carolina told Reuters. “But those are more or less picked over with a couple of exceptions here or there.”

Energy constraints are one limiting factor on a company’s ability to rapidly develop these major projects, Reuters reported. Renewable power projects have been facing delays, and the time to link a major project to the grid has grown from three years in 2015 to five in 2020.

“Some of these projects require hundreds of megawatts,” Didi Caldwell, president of consultancy firm Global Location Strategies, told Reuters. “At the same time, we’re shutting a lot of coal plants.”

Scout Motors, the off-roading arm of German automaker Volkswagen, was ultimately forced to downsize its plans for a 2,000 acre facility to a 1,600 acre facility in part because of difficulties finding a site with access to enough green energy sources and sufficient skilled labor, according Reuters.

“We were hitting a deadline,” CEO Scott Keogh of Scout told Reuters about the company’s decision to downsize to hit other desirables.

Some states, such as Michigan, South Carolina, Virginia and North Carolina, have either invested or proposed investment in megasite development in a bid to meet demand.

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