The Inflation Reduction Act

In August 2022, President Joe Biden passed into law the Inflation Reduction Act, which in a White House press release was described as “the most aggressive action on tackling the climate crisis in American history”.

The bill allocates hundreds of billions of dollars in what are essentially clean electricity tax credits. This includes projects in wind, solar, geothermal, and advanced nuclear electricity generation, financing for energy infrastructure, and carbon capture and storage. Certain individuals will benefit as well, such as those with energy-efficient properties (i.e. homes with solar panels?) and those purchasing electric vehicles. $20 billion is being allocated towards what is being called a “Green bank” that will invest in clean energy projects, particularly in poor communities.

The New York Times has a great overview of what is included in the bill, which is comprised of $490 billion in spending and tax cuts and $764 billion in savings and new revenue.

I need to dig into this bill more, but it’s almost giving me “Dodd-Frank vibes”. The Dodd-Frank Act created hard-to-ignore opportunities for non-banks like Citadel Securities to enter the market making space. Is this the Dodd-Frank Act for the energy sector? There will certainly be new opportunities made possible through this bill; at the very least, wind and solar projects will continue to be subsidized by the government.


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