Two years since CHIPS and Science Act: Early wins, challenges, and opportunities ahead 

Powering the clean energy transition requires massive investments in supply chains and critical energy technologies to set the U.S. up for success in researching, manufacturing, and deploying clean energy. One example is the semiconductor, a material that conducts electricity and manages its flow. As we increase electrification to support U.S. decarbonization goals, semiconductors will play a critical role in grid management, necessitating  additional manufacturing to support energy storage, new energy systems like solar and wind, and charging infrastructure for electric vehicles.  

To meet the growing demands on the electricity grid, the U.S. must invest in innovative technologies that ensure reliable energy supplies such as advanced nuclear reactors and fission energy. The CHIPS and Science Act (CHIPS Act) represents a step in the right direction for these key pieces of the energy transition.  

What is the CHIPS and Science Act? 

The United States has not historically led in semiconductor manufacturing, relying heavily on other countries for production. Producing semiconductors is also highly energy intensive and requires a skilled workforce. In 2022, the U.S. passed the CHIPS Act to advance domestic manufacturing of semiconductors and lessen our dependence on other countries.  

The CHIPS Act provides $52.7 billion for American semiconductor research, development, and manufacturing. The majority of that funding – $39 billion – is dedicated to boosting semiconductor manufacturing domestically, including workforce development and supply chains. Notably, the advanced manufacturing tax credit within the CHIPS Act offers a 25% investment tax credit for semiconductor manufacturing and requires compliance with the Davis-Bacon Act for prevailing wages. 

In addition to direct funding for semiconductors, the CHIPS Act supports research and development, innovation, and advancement of clean energy technologies. The CHIPS Act also promotes innovation and clean energy technologies through additional authorizations, particularly to support fusion energy and advanced nuclear reactors. Specific provisions include: 

• Authorization for fusion energy research and pilot plants, with over $1 billion in funding authorized to support fusion. 

• Authorization for research development and demonstration of advanced nuclear reactors, and university nuclear science and engineering. 

• Authorization for isotope research, development, and demonstration. 

• Authorization for the National Oceanic and Atmospheric Administration (NOAA) to conduct low-dose radiation research. 

• Authorization for a Foundation for Energy Security and Innovation (FESI) to support innovative technologies.  

• Authorization for a Clean Energy Incubator Program. 

• Authorization for expanded research and development at the Department of Energy (DOE), including for carbon removal.  

• Authorization to expand the National Institute of Standards and Technology (NIST) greenhouse gas measurement program. 

The impact of the CHIPS Act on climate   

Semiconductors will play a critical role in clean energy supply chains – from enabling grid management to supporting the deployment of clean energy technologies. The CHIPS Act is spurring domestic semiconductor manufacturing that will be needed to meet this demand, and the federal government is providing the funding, programs, and guardrails to maximize the impact of these investments.  

Since the CHIPS Act took effect, the U.S. semiconductor industry has invested over $200 billion in manufacturing and over 6,000 new, quality jobs. The U.S. is on track to triple its manufacturing capacity of semiconductors by 2032. This growth is driving private investment in semiconductor manufacturing across the country, including states such as Ohio and New York that are offering additional incentives. 

Here are highlights of recent federal activities that are unlocking these investments: 

• The Department of the Treasury issued guidance to effectively utilize the advanced manufacturing tax credit, and the Department of Commerce issued a rulemaking to ensure benefits flow domestically and prevent abuse. 

• Just this month, the Department of Commerce announced the process for selecting the first three research and development facilities funded through the CHIPS Act to accelerate innovation, grow workforce, and the semiconductor ecosystem. 

• Federal agencies, states, and cities are partnering to launch new workforce hubs, and college semiconductor programs to help spur workforce growth, regional supply chains and innovation hubs. 

• The Department of Commerce dedicated $11 billion to fund four research and development programs to advance U.S. competitiveness and workforce development. 

• This CHIPS Program Office provided numerous implementation strategies to guide the vision and execution of leveraging the CHIPS Act resources. 

• CHIPS for America released funding opportunities for facilities to grow domestic manufacturing and support workforce development, innovation, and research and development. 

While the full climate impacts for these authorizations will not be felt right away, these are necessary investments for federal agencies to promote the advancement of innovative new technologies that require further research, demonstration, and deployment. However, these authorizations demonstrate federal support, a positive signal for developers.  

Federal investment is critical to derisk technologies, lower costs, and support the buildout of markets necessary for technologies to succeed. Nuclear and innovation investments are also important to decarbonizing the power sector and will ultimately lead to the development of sustained clean energy sources necessary to decarbonize our grid. 

What challenges remain? 

While many technologies are covered in the CHIPS Act, they are at various stages of development and face different challenges. It will take considerable federal investment and public-private partnerships to accelerate the deployment of fusion and advanced nuclear reactors by derisking technologies, lowering costs, and supporting regulatory processes that enable deployment. More federal funding is needed to continue to research and demonstrate these technologies at scale.  

While the CHIPS Act is a step in the right direction, more action is needed. The U.S. semiconductor industry will need to address several key challenges, including: 

• Energy and resource intensity: The energy requirements for semiconductor production, and other resource requirements such as water usage, are high. While many CHIPS Act beneficiaries are committing to mitigating these issues, CATF will be tracking this issue closely. 

• Workforce requirements: Companies will need to invest in a robust workforce to achieve the CHIPS Act requirements for quality jobs or risk project delays. 

CATF looks forward to tracking how the CHIPS Act will continue to drive federal investment and action to advance innovative clean technologies, as well as engagement from state and local actors to develop the regional supply chains essential for supporting semiconductor manufacturing and job creation in communities nationwide.