US climate bill a ‘positive start’ for sustainable investors

Fund managers encouraged by clean energy tax credits in Inflation Reduction Act


The sustainable investment industry has welcomed the news that US president Joe Biden’s climate bill has been approved in the Senate as a “positive start”, unlocking investment needed to tackle climate change.

Earlier this week, the US Senate passed a $430bn bill intended to fight climate change, lower drug prices and raise some corporate taxes.

The Inflation Reduction Act includes more than $350bn in specific incentives to boost investment in wind and solar technology investment, coupled with plans to accelerate electric vehicle adoption and encourage energy efficiency spend. It aims to reduce carbon emissions and shift consumers to green energy.

It was approved by a 51-50 party line vote but must still be approved in the House of Representatives, and is much smaller in scope than Biden’s original ‘Build Back Better’ initiative.

“Clearly there is more to do, but this is a positive start,” said David Harrison, fund manager at Rathbone Greenbank Global Sustainability Fund.

“The news provides incremental support to accelerating investment in many technologies that already make strong economic sense (particularly in the areas such as wind technology) and will help deliver better long-term energy security.”

Jennifer Boscardin Ching, client portfolio manager, thematic equities at Pictet Asset Management, also described the bill being approved as a “positive surprise”.

For her, the most relevant parts of the Act for sustainable investors in the clean energy sector are the extension of tax credits for renewable energy, a stand-alone tax credit for energy storage, an updated tax credit policy for electric vehicles, tax credits for green hydrogen, a methane emissions reduction programme for oil and gas facilities, and tax credits for manufacturers making ‘critical materials’ in the clean energy value chain.

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