August 16, 2022

What does the newly announced Inflation Reduction Act mean for climate technology?

After nearly two years of uncertainty and the threat of near losing a majority in Congress without passing major climate legislation, Democratic senators are finally ready to support a bill that offers incentives for climate technology. important

Senators Chuck Schumer (D-NY) and Joe Manchin (D-WV) announced July 27 their intentions to introduce. Inflation Reduction Act B.E. 2022 (IRA22) to the Senate floor The main objective of this bill is to reduce inflation. This means that the impact will be felt at startups and legacy companies everywhere with high costs and limited capital. and hopefully by all Americans

The intricacies of the bill are eloquently readable by other stores that are already covered. general offerThis paper begins the process of asking questions about potential impacts on behalf of all stakeholders within the climate technology sector. Scientists, entrepreneurs, venture capitalists and all involved employees within clean energy.

First ask specific questions about the initiative. Ask the following introductory questions:

  • Will the bill’s proposed tax credit benefit emerging tech companies or support established companies with solid production records and economic stability? If both, how will the money be allocated?
  • Will the ability to take advantage of financial incentives include diversity and equality requirements? As described in the latest Climate Tech Weekly newsletter, the number of funding deals for women-led businesses remains extremely low. And the current data does not digest the number of businesses led by black, indigenous or colored entrepreneurs.
  • This release will include accessibility standards and education initiatives. This ensures that all Americans can understand and benefit from this bill. And because of this technology was created or not.

About Manchin’s official websiteHe published a lengthy note proclaiming that “…[to ensure] Our country invests in energy security and climate change solutions. We need to remain a global superpower through innovation rather than elimination … as world powers. It is imperative that we do not undermine our superpower status by eliminating reliable and affordable fossil fuel energy first. The technology is ready to bear the weight reliably.”

Manchin’s phrasing left little to interpret. West Virginia senators imposed coal plant conservation and oil use for an indefinite period. Along with the production of electricity from solar, wind, hydropower, hydrogen and nuclear throughout the country. There was no specific mention of natural gas. But it is considered safe to include in the fossil fuel category. these fossil fuels (and may contain hydrogen) requires pipelines for transportation. Added new types of questions to consider.

Follow-up questions:

  • How will the infrastructure of the pipeline be fixed?
  • There is a technologically innovative way to build the infrastructure of the pipeline to ensure minimal environmental and cultural impact (such as the protests that erupted after the Dakota Access Pipeline plan) and whether old infrastructure can be effectively recycled?
  • Who will oversee the permitting process and pipeline development? Federal government agency? Government contracts with private companies? Or will it be state-to-state?
  • It is reported that Alaska Territory and Gulf of Mexico Will be ready for new oil and gas drilling leases An unprecedented influx of fossil fuels will affect the market for renewable energy. Is it slowing down the development and integration of existing renewable technologies with respect to familiar oil and gas? If so, are there contingency plans to combat market impact?

Next Bill Claims To Cut America’s GHG Emissions By 40 Percent By 2030 The Washington Post reports One path toward that goal includes a $30 billion production tax credit to boost U.S. production of solar panels, wind turbines, batteries and critical mineral processing. along with a $10 billion investment tax credit. To ensure climate technology was built in the United States.

Follow-up questions:

  • What does the word “production” mean in this context? Building solar panels and wind turbines literally? Or it also includes the development of infrastructure critical to this clean energy distribution. (including system improvements and older grids, upgrades, if no overhaul Today’s energy infrastructure and ensuring clean energy is available throughout the United States regardless of geographic location)? And will some of these funds be devoted to the technological innovation of this infrastructure?
  • As GreenBiz previously reported, for example, the use of green hydrogen power. The ability to safely and efficiently transport hydrogen is required. This incentive applies to companies that highlight those transportation needs, or only to businesses that build hydrogen and renewable energy fixing engines. Other “environmentally friendly”?
  • The federal government will require companies to Those taking advantage of tax benefits must submit an annual or semi-annual report to confirm their eligibility for the incentive. To ensure that taxpayer money is used efficiently and effectively for renewable energy generation and climate technology? If yes, what will it look like? How will the auditing body be chosen?
  • What does the company need to participate in this process? Will additional resources be required to comply with the law and be consistent?

Another surprising aspect of IRA22 is the inclusion of a 15% corporate tax minimum for companies generating more than $1 billion in annual revenue. The likes of Amazon, Google, Apple, Meta, Microsoft and Alphabet will suffer financially. Each of these major tech companies is also investing heavily in building climate technology. It provides funding to innovative climate technology startups and substantial funding to produce renewable energy and mitigation technologies backed by IRA22.

Jamie Beck Alexander, Director of Drawdown Labs, explains more about the complex issue of corporate taxes. Speaking of conversations between Alexander and big tech companies, Alexander said: “Big tech companies are the same. [stated] If you delete any language about corporate tax We may be able to support [the bill] but we can’t We will not support anything with such corporate taxes.”

Alexander added that employees who work with and for these multi-billion dollar companies should be vigilant. Increased internal pressure to ensure that each company’s publicly-proclaimed environmental and social values ​​remain equally important to economic profits.

Follow-up questions:

  • Will the proposed 15 percent corporate tax affect the willingness of multibillion-dollar companies to continue investing and supporting Climate Tech funds and startups?
  • Amazon, Google, Apple, Meta, Microsoft, Alphabet and others. Will sneak lobby to kill Bill secretly? Or will they benefit from all the jobs and money invested in climate tech startups?
  • or as realistically as possible Will it be a little from all of the above? Lobbying against taxes while taking advantage of the benefits for their climate tech jobs?

These are just a few questions. of the iceberg Since the bill is 725 pages long, it takes time to list all the details. If/when IRA22 passes the Senate, it also goes through the House of Representatives for President Biden to ratify. Policy will change The number will be slashed or reduced. And industry lobbyists will use outside pressure.

until the bill becomes law. The climate technology sector can only track developments and prepare accordingly, and GreenBiz will continue to ask questions.

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