The Inflation Reduction Act of 2022 (the "IRA") allows firms to develop and sell clean energy tax credits. Now that most of the key guidance has been finalized, here is everything you need to know about energy tax credit sales.
Within the last two years, the IRA has spurred billions of dollars in investments in clean energy projects, particularly in wind, solar and storage technologies, and this momentum is expected to grow with the introduction of the new advanced manufacturing credit and other tax credits geared towards emerging technologies.
A recent intelligence report from Crux Climate, a platform that facilitates energy tax credit sales, projects that the total market for sales of credits will reach $45 billion by the end of 2024. You can download the full report here.
However, despite the billions of dollars already invested in clean energy projects, there are growing concerns about the future of the IRA due to the potential upcoming change in administration. A recent letter from a group of Republican congressmen to the Speaker of the House cautioned against Republican efforts to repeal the IRA, warning that a repeal "would create a worst-case scenario where we would have spent billions of taxpayer dollars and received next to nothing in return," and urging the Speaker to prioritize "business and market certainty" when considering the IRA's future.
As the summer winds down and we head into the election, the uncertainty surrounding the future of energy tax credit sales might be what's fueling the market, which shows no signs of slowing down.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.