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In Biden’s climate law, a boon for green energy, and Wall Street

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By illuminem briefings

· 2 min read

Illuminem summarizes for you the essential news of the day. Read the full piece on The New York Times or enjoy below:

🗞️ Driving the news: The 2022 climate law in the United States, signed by President Biden, has spurred a surge in clean-energy investments and simultaneously created a new market in green tax credits
• This market benefits not just the clean energy sector but also banks, insurance companies, lawyers, and start-up financial firms

🔭 The context: The law facilitates smaller companies in accessing funding by allowing them to sell their tax credits to larger, tax-liable companies
•  This system acknowledges that many companies couldn't directly use tax incentives due to insufficient tax liabilities, and is expected to enable about $80 billion a year in transactions to drive investments in climate-friendly technologies

🌍 Why it matters for the planet: By creating tax incentives for solar, wind, and other low-emission technologies, the law significantly contributes to the fight against climate change  
•  The new marketplace has expanded financing opportunities for emissions-reducing projects, adding more scrutiny and involvement from the private sector

⏭️ What's next: This burgeoning market has generated excitement in financial circles, with a rise in online platforms aiming to connect buyers and sellers of tax credits
•  However, it also raises questions about the enrichment of industries that are often criticized for their environmental impact, and the potential for large companies to reduce tax bills counter to broader fiscal goals

💬 One quote: Jessie Robbins from Generate Capital reflects on the situation: “While it may be full of friction and transaction costs, it does bring sophisticated financial interests, investors” into the world of funding green energy

📈 One stat: Clean-energy companies are currently selling their tax credits at rates between 75 and 95 cents on the dollar, with the actual value being reduced further due to fees and intermediaries

Click for more news covering the latest on climate change

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