Some (Potentially) Good News
Wednesday brought one of the few positive climate surprises since Buoyant was founded in early 2020. The Inflation Reduction Act of 2022 puts in motion the type of momentous governmental support that we’ve been so strongly advocating for and which the US so desperately needs. Although the proposed legislation is just that – proposed – we remain overjoyed that progress has been made after the abrupt shortfall of the Build Back Better legislation.
There has been no shortage of summaries related to the plan, among our favorite being Dr. Leah Stokes tweet thread, Canary Media, the Atlantic, Rhodium Group and MIT Technology Review, but we felt we’d be remiss if we didn’t outwardly share our exuberance for how meaningful this moment is in the history of clean energy and ClimateTech.
In short, the new and expanded tax incentives and funds in this package represent $369 billion of clean energy and climate commitments and a possible ~40% reduction in nationwide carbon emissions by 2030, roughly 80% of the US’s Paris Agreement commitment, and we believe the Inflation Reduction Act presents a generational opportunity to turn the tide of US complacency toward climates worsening impacts.
A few of Buoyant’s most significant takeaways of the Inflation Reduction Act:
Tax Credit Expansion and Extension
A 10-year extension of the Production Tax Credit (“PTC”) and Investment Tax Credit (“ITC”) programs and broadening of the scope of the credits to include any low/zero carbon form of power generation and storage.
Production tax credits for the manufacturing of EVs, batteries, solar panels and wind turbines
Extension of tax credits for consumer EV purchases ($7,500 for new, $4,000 for used) while also lifting the existing cap on specific OEMs which Tesla and GM had reached
Clean Energy Rebates and Subsidies
Expanded home energy rebate programs and direct subsidies to fund modernization of home appliances and subsidizing the purchase of heat pumps, electric water heaters and rooftop solar, among other energy efficient options
New Funding/Funding Sources for Domestic Clean Energy Technologies
The introduction of a Greenhouse Reduction Fund which establishes a federal green bank to offer loans, grants, and other assistance for emissions reduction investments (e.g., solar installations, clean transportation).
Expanded loan programs to support the creation of new, or retrofit of existing, clean-vehicle manufacturing facilities
Climate Equity Investments
Perhaps one of the biggest surprises was an overwhelming commitment to climate equity through environmental and climate justice grants for community-led projects, neighborhood access and equity grants, grants to reduce air pollution at ports, and emissions reduction in agricultural operations
Methane Restrictions and Pricing, although a carbon price wasn’t included in the proposal, a first-of-its-kind Congressional restriction on industry-wide methane emissions is present with escalating fees for breaches beyond the threshold, as well as royalty fees for methane extracted from public lands
Collectively, this legislation is exactly the stimulus and support that America needs to stop its terminal trajectory, establish a leading position in global climate and clean energy, and put the country on a clear path toward its Paris Agreement commitments.
What this means for Buoyant:
The ClimateTech sector has been resilient to the current economic slowdown. We feel that this package of incentives will continue to help the category remain buoyant and help create a stronger commercial market for digital climate solutions. We saw this period of growth and innovation in the clean energy industry following the package of incentives deployed during the American Recovery Act in 2009, and we expect to get a similar boost for climate innovation as a result of the Inflation Reduction Act.
Additionally, we are encouraging our portfolio companies to work with elected and appointed officials in State and Federal governments to identify pools of funding that can help their small but mighty companies grow. Given our decades of experience in the climate and clean energy industries, Buoyant has learned how to work with government to support investments that drive innovation and has developed relationships with government officials who are leading this latest effort. We will help our portfolio companies identify relevant programs and advocate for themselves because small high growth companies are the job creators during economic corrections historically, and elected officials like jobs.
Lastly, we expect that this legislation will give a much-needed emotional boost to those of us that have been toiling away to help solve our climate crisis for years. A little jolt of good news can go a long way to energize a start-up company or investment firm that is already inspired by purpose and mission to work even harder and more urgently.
Buoyant believes it is ClimateTech’s time to shine. We couldn’t be more excited to invest and support early-stage entrepreneurs who recognize this call to arms and its amazing opportunity. Let’s Go!
What we are…
…Reading
A Summer Reading List to help boost your climate knowledge from Carbon Neutral Club. Specifically, we are reading Ministry for the Future – a science fiction novel about climate change set in the not-so-distant future by Kim Stanley Robinson that will haunt you as you witness daily reports of heat waves, floods, and droughts upon us.
Buoyant knows there is great talent flowing into ClimateTech, and it seems like the word has gotten out!
Some amazing efforts in Canada and Germany focused on decarbonizing the built environment through retrofits.
More data on homes with high natural disaster risk, including vacation homes
…Watching
…Listening To
Events
Buoyant is excited to sponsor the Chicago Innovation Awards this year as they focus on climate change. The main event is on November 16. Allison was honored to be included in a recent discussion with climate change leaders at the Chicago Innovation Summit this past month.
Work with us! (& some of our favorite people)
Raptor Maps is hiring!
Senior Editor and Content Analyst: Support content marketing, produce whitepapers, and develop SEO strategies. The ideal candidate has previously worked in a B2B Solar or Energy environment and has 10+ years of technical writing experience.
Growth Strategy Manager: Develop an expert perspective on the challenges of the solar market and orient Raptor Maps' value proposition towards our customers' most urgent business needs. Investment banking or consulting experience is a must-have.
Account Executive: Dynamic sales role that will educate customers across the entire lifecycle while bringing strategy to the team to advance Raptor Maps' growth and impact.
For fun (since you’ve made it this far…)
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The Lighthouse is a resource for climate tech updates and a channel for us to regularly share our perspective on Buoyant’s investment thesis and industry sectors. We know we are not alone in producing great content and will amplify the voices of others by highlighting those resources we find thought-provoking.