Industry News

 View Only

How the Inflation Reduction Act Will Unlock the Energy Transition’s Potential

By District Energy posted 06-26-2023 16:24


The Messenger


Last year’s Inflation Reduction Act (IRA) turbocharged the energy transition with a suite of new subsidies and tax credits to incentivize clean energy and decarbonization projects. Since then, the energy sector has responded in force, announcing nearly 200 new clean energy projects that will create more than 140,000 new jobs across 41 states, according to one estimate.

As Brian Deese, the former director of the National Economic Council who helped shape the IRA, wrote recently in the New York Times, “It seems clear already that the law will stimulate significantly more investment in clean energy than was at first thought possible.”

While more projects will be financially viable thanks to the tax credits offered by the IRA, we need to turn the hundreds of billions in tax credits into steel in the ground as quickly as possible. And one unique piece of the landmark legislation may do just that: transferable tax credits.

Before the IRA, many clean energy developers were unable to use tax credits or were forced to create expensive and legally complex formal tax equity partnerships alongside banks to take advantage of the incentives. But thanks to the IRA, clean energy tax credits can now be transferred to unrelated buyers for cash.

Continue Reading