Is Place-Based Green Industrial Policy Effective ? Evidence from the Inflation Reduction Act

Joep Keuzenkamp, Jacopo Mazza, Bob Rijkers and Katherine Stapleton

No 11337, Policy Research Working Paper Series from The World Bank

Abstract: Is place-based green industrial policy effective? This paper examines the Inflation Reduction Act’s Energy Community provisions, which provide spatially targeted incentives for renewable energy investment. Using a difference-in-differences design with investment and job vacancy data, it shows that the probability of solar investment increases by 0.14 percentage points in targeted areas, equivalent to a 144% increase relative to its counterfactual level. Wind investment shows no response. Solar employment gains are modest and wind employment is unaffected. These findings suggest place-based incentives can stimulate green investment in designated locations, but may be less effective at generating local jobs.

Date: 2026-03-19
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