If there are two things the Jackson, Wyo. area has to offer, it’s natural resources and very wealthy locals. Nathan Wendt is trying to use the Biden administration’s clean energy incentives to bring the two together.
Mr. Wendt, the president of the Jackson Hole Center for Global Affairs, has been working on issues related to climate change and local economic development for years. And as President Biden pushed climate-related policy after climate-related policy through Congress—first the infrastructure bill and then the Inflation Reduction Act—and a dizzying array of tax credits, loans and grants became available, he sensed an opportunity.
“For Jackson Hole investors looking for the next big thing, there is no reason to look beyond state lines,” Mr. Wendt wrote in an opinion essay in The Jackson Hole News & Guide this spring in which he called “Flush Tax Credits “ praised law provided. “The big opportunity to make money this decade,” he wrote, “will be to invest in net-zero projects in energy communities, including in Wyoming.”
Wyoming is both the nation’s largest coal producer and a Republican stronghold, where the transition to clean energy has at times faced fierce opposition. The entire congressional delegation voted against the Inflation Reduction Act. But the state is exceptionally well placed to benefit from some of the green incentives the government is offering.
Wyoming’s geology and legal framework make it a top candidate for emerging carbon capture technologies, which the law promotes through healthier and expanded tax credits. The energy industry’s existing pipeline infrastructure and workforce could help with hydrogen development. And perhaps most importantly, the state has a lot of people the Inflation Reduction Act is courting — well-heeled investors looking for a way to make a profit from the green energy transition.
The Biden administration’s climate law works by attracting private capital to clean energy. While the plan includes targeted grants, many of its potentially key provisions are aimed at transforming the country’s energy supply — and its energy workforce — by attracting people with capital to invest. Tax breaks and other incentives make it more attractive to make financial bets on risky but potentially transformative green technologies.
That’s prompting Mr. Wendt and other climate researchers across the state to look at Jackson, a city full of potential investors who could pour money into new projects. The elite enclave adjacent to Grand Teton National Park is, in some ways, the highest-income county in the United States. And, Mr. Wendt argues, many of its millionaires and billionaires work in the financial markets but retreated from the big coastal cities because they loved the natural beauty that Wyoming has to offer.
He suspects they may have both the money and the motivation to make local climate investments a reality.
“Teton County has historically been disconnected from the larger economic history of Wyoming,” Mr. Wendt said on a late August morning in the Jackson town square, a few feet from an arch of elk antlers and a few hundred yards from several asset management offices. “We’re trying to close that gap.”
It’s not just Mr. Wendt who senses a chance of winning. Investors and companies across the country have taken notice. According to Bloomberg logs, about 150 companies have discussed the Inflation Reduction Act in investor presentations since August alone.
In fact, interest has exceeded expectations. The Congressional Budget Office had once projected that energy and climate spending related to the law would amount to about $391 billion from 2022 to 2031, with more than 60 percent of that coming from claims for various tax credits.
But analysts at Goldman Sachs believe the total amount could be three times that, as people and businesses take advantage of the stimulus much more than the government expected. That could mean about $3 trillion flowing into green energy investments over the next decade — $1.2 trillion from the government in the form of tax credits and other incentives, supplemented by even more capital from private companies. While their estimates are on the high side, other research groups and the government itself have revised their forecasts upward.
For its part, Wyoming could be well-positioned to benefit from some of the law’s most cutting-edge provisions. Some estimates suggest the state could make the largest per capita legislative investment of any state in the country.
The opportunities are tied to both local policy and local resources, said Scott Quillinan, senior research director for the School of Energy Resources at the University of Wyoming.
For example, the law encourages the development of hydrogen through a new tax credit, making it a significantly cheaper potential fuel. Wyoming already has pipeline and rail networks that could help transport hydrogen blends, Mr. Quillinan said.
The law also expanded a tax credit for so-called direct carbon sequestration, the process of removing carbon from the air and storing it underground or converting it into new products. In Wyoming, there are spongy rocks filled with pockets of saltwater that are ideal for storing trapped carbon. Additionally, it is easier to obtain the necessary permits to build such projects in Wyoming than in many other states.
And while it was once difficult to finance costly direct capture projects, the law changed that, increasing the credit for directly captured carbon stored in saline rock formations from $50 to $180 per ton.
“The incentives are finally making these investments profitable,” said Michele Della Vigna, a researcher at Goldman.
Environmentalists sometimes question both hydrogen and direct carbon capture technologies, in part because they are still relatively untested. But since the law was passed last year, announcements of carbon capture projects — including a large one in Wyoming — have surged.
Project Bison, a carbon capture facility currently being developed by the company CarbonCapture, is expected to be the largest project of its kind, and big names like BCG and Microsoft have signed up for the carbon removal credits.
Jonas Lee, CarbonCapture’s chief commercial officer, said that without the law the project would most likely have been smaller and slower. Despite the law’s help, the planned opening this year has been delayed. Mr. Lee did not give a reason or a new opening date, but said the company still expects to operate at scale.
Rusty Bell, director of the Gillette College Foundation’s Office of Economic Transformation in Wyoming, believes the administration’s climate offensive will lead to such hiccups. The introduction of new technologies takes time. It can be difficult to navigate the maze of incentives and grants on offer.
But Mr. Bell, who co-authored the opinion essay with Mr. Wendt, also says that Campbell County, where he lives, recognizes that its future as a coal-producing area will depend in part on the use of new technologies. Residents can look at struggling coal communities elsewhere and realize: “We don’t want to be like this in 10, 15, 20 years,” he said.