The Inflation Reduction Act: Certainties But Still Lacking

The Inflation Reduction Act: A Green Catalyst

A lot of media has really focused on the fact that it is a bill that we have been waiting for this year.

Certainly it is a good bill to come through. We like certainty. We like the fact that the tax extensions were put in place for 10 years, which gives certainty to builders and project developers in terms of outlaying their CapEx and not having to have to decide whether, in any given year, certain extensions are going to be put in place by the government.

We think the certainty is good. However, the overall size of the Bill is still lacking relative to some counterparts. In Europe, there has been over a trillion dollars earmarked towards going green and moving to more renewable resources. Even in China and India, even though there have not been direct targets, there is a lot being done on the regional and local levels to move towards a more sustained renewable–based economy.

In the U.S., while the tax credits for solar wind are really great and I am glad they have been put in place, we think that there is definitely a lot more that can be done in other verticals.

One of them is agriculture. In agriculture, what was in the Bill was just a smidge of what was expected in Build Back Better, and those funds were basically earmarked towards helping farmers being able to keep decent balance sheets in order to operate. That does not do a ton for us in terms of actually addressing emissions, in which agriculture hits 25% of globally.

The technologies that are emerging, such as green hydrogen, such as nuclear, such as carbon capture, there were incentives that were put in place for that to ignite more development and to get those technologies up to scale. We think in order to really, really move the ball along, you're going to need to incite quite a bit more to get developers really on board to take the risk to fund those projects and to get those projects started, especially since it takes many years to build out and we are probably not going to see fruition until probably 10 years later.

There are a lot of verticals that I think the government can address. Ultimately, however, it is also largely up to to the regional and local level, states themselves, to incentivize more development of whatever technology that they think will benefit their labor source, benefit their state's employment and ultimately, stitch into the broader web of what we are seeing on national developments there.

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