Tuesday, 9 August 2022

Big News on Climate in the US

The US Senate have now approved the Inflation Reduction Act - a landmark piece of legislation which includes $369bn of tax credits and support, the largest in American history, for a range of measures which will reduce carbon emissions by up to 44% by 2030 and keep the US on track to achieve its goal of net zero emissions by 2050. This is less than the 50 - 52% reduction promised by Joe Biden last year but it has been a difficult 12 months trying to get everyone in his own party on board. 

However, there is no doubt this is a big deal for the climate as the US is responsible for around 15% of global CO2 emissions...second only to China with 28%.

The bill will transform how Americans generate and use their energy and should shape their climate change and industrial policy for decades into the future when formally passed by the House in the next few days.

The legislation will provide billions of dollars for the expansion of solar and wind power production adding an additional 550GW which will more than tripple clean energy production to power over 100m homes. Here’s a summary of the main provisions (pdf).

Of course, investment from the federal government on such a massive scale will give more confidence to attract much more investment from individual states and the private sector in green energy. Some commentators are suggesting this could be as much as $2 trillion.

INRG 3m Share Price

Obviously this will be a welcome boost for the renewable energy industry. The likes of iShares Global Clean Energy (March update) holds many of the US based companies - Plug Power, Enphase, Solaredge - that should benefit from this legislation over the coming years so that’s one I will be holding long term.

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