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A $369 billion gold rush

Jul 29, 2022
Illustration of golden solar panels.

Illustration: Gabriella Turrisi/Axios

The $369 billion allotted for climate and energy provisions in the Inflation Reduction Act of 2022 will have wide-ranging impacts on public and private companies for decades as they brace for an influx of ready-made funds in the space.

Why it matters: Climate technology companies stand to benefit as much as, if not more than, everyday consumers, from better access to a tranche of funds — via grants, loans, credits or subsidies — that didn't exist even earlier this week.

Zoom in: Companies in developing industries like direct air capture will now have an entirely new pool of capital — albeit through a slew of bureaucratic mechanisms — to pull from should the bill pass.

  • Tax incentives, one of the primary carrots of the bill, tend to favor established companies over startups due to the size and scale needed to see measurable impact.
  • Companies with existing relationships with other big clients — CarbonCure's contract with Amazon for some new warehouse construction comes to mind — are poised to reap some of the benefits they may otherwise not see due to their size.
  • That's also good news for companies in other capital-intensive industries — Tesla is a good example on the EV side — that could tap any number of credits and subsidies for everything from manufacturing to unit sales.

State of play: The bill would provide tax credits and other incentives to spur the development and deployment of clean energy and carbon abatement technologies, our Generate colleagues Ben Geman and Andrew Freedman write.

  • That includes roughly $30 billion in credits for domestic manufacturing of clean energy components, including solar panels, wind turbines, batteries and critical minerals processing.
  • An additional $10 billion investment tax credit is set aside to build new manufacturing facilities.
  • Another $30 billion is set aside for state and utility grants and loans to invest in renewable energy and storage.

Yes, and: The bill also allocates $48 billion to the Department of Energy's Loan Programs Office, which has already indicated its aggressive stance on spurring along domestic battery production, among other electrification priorities.

  • The low-interest loans are often a primary financing tool for capital-intensive projects like manufacturing or grid electrification, both of which are highlighted in the draft bill.

The bottom line: The Inflation Reduction Act could produce a once-in-a-generation gold rush for climate technology companies.

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