ESG, Recycling, & Climate | Weekly Thematic

Is The IRA Inflationary? Some Seem To Think So – We Mostly Agree
April 26, 2023
Products Mentioned:
Hydrogen, Methanol, Ammonia, Nuclear, Wind, Solar, Geothermal, Hydropower, Lithium, Copper, Nickel, Renewable Fuels/Polymers, Polypropylene, Polyethylene, Corn
Companies Mentioned:
Lazard, ExxonMobil, CF Industries, NextEra, Eastman, Dow, Mura Technologies, Lummus, Citroniq, Braskem, Air Products, Linde, Air Liquide, Nippon Sanso, Chart Industries, World Energy, BP, Tesla, Lucid, Rivian, Polestar
Subjects Covered:
Recycling, Renewables, Carbon Capture, Emissions, New Energy, The Hydrogen Economy, ESG Investing, Climate Litigation, Clean Fuels

C-MACC Weekly “CRETER” (Climate etc.)

Is The IRA Inflationary? Some Seem To Think So – We Mostly Agree

  • The IRA promotes US investment in poor US states and counties, with limited trained labor, as well as the use of (insufficient) US materials and manufacturing.
  • These two factors alone suggest inflationary pressure, especially if projects move quickly to get incentives (e.g., 1/1/25 for power production tax credits).
  • The risk of project failure because of underestimated costs, or because the accompanying workforce training has not been factored in correctly is high.
  • Higher capital costs may also play a factor unless we can contain inflation, as higher interest rates and fear of economic malaise make investors more cautious.
  • Government grants and loan guarantees can help, but agencies are conscious of inflation and unlikely to relax lending standards.

See PDF below for all charts, tables and diagrams


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