Go Green or Go Home

September 15, 2022 | Griffin Gildea, Associate Research Analyst

Combination stacked column and marker chart analyzing recent infrastructure legislation. Chart subtitle: The Inflation Reduction Act represents a nearly 4X projected increase in clean, renewable energy expenditures compared to the bipartisan infrastructure bill passed in late 2021. Chart visual description: Left Y-axis corresponds to column data and ranges from $0B to $2,000B in $500B increments. X axis labels three categories: Infrastructure Investment and Jobs Act, signed 11/15/21; Build Back Better Act, passed House 11/19/21 and stalled; and Inflation Reduction Act, signed 8/16/22. Right Y-axis corresponds to Emission Reduction marker, ranging from 0% to 30%. Each category column stacks Clean Energy & Decarbonization Spend in green at base of column and above it, Total Spend in slate. Orange marker shows Emissions Reduction Through 2030 vs. Status Quo. Chart data description: IIJA column total is $550B with $100B of that in clean energy and decarbonization spendng, with marker at 1%. BBBA column total is $1,850 with $450B of that in clean energy and decarbonization and marker at 25%. IRA column total is $437B with $370B in clean energy and decarbonization and marker at 21%. Chart sources: Princeton University ZERO Lab data as of August 2022, Stonepeak. End chart description.

Accelerating energy innovation is proving to be a key driver of decarbonizing the economy and mitigating climate change and may also expand the opportunity set for infrastructure-focused investors. President Biden signed the Inflation Reduction Act of 2022 (“IRA”) into law on August 16th, 2022. The legislation is projected to raise $737 billion in revenue, require total investments of $437 billion, and reduce the deficit by more than $300 billion.¹ The IRA bill aims to help offset long-term inflationary pressure via targeted spending in clean-energy renewables and decarbonization initiatives over the next decade-plus. In addition, the bill will utilize tax credits and government subsidies to encourage household and commercial renewable energy purchases, clean-energy manufacturing, and decarbonization of domestic industries. As private equity and infrastructure investors digest the impact of the new legislation, we expect electric utilities and clean hydrogen production to be key beneficiaries of an increase in capital deployment. Infrastructure-focused strategies can provide exposure to these tailwinds while being ESG-friendly and more broadly helping to diversify a portfolio, provide a hedge against inflation, and generate attractive long-term risk-adjusted returns.

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¹ Inflation Reduction Act of 2022, Investopedia

The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.

Griffin Gildea
Associate Research Analyst

Get to Know Griffin

The opinions expressed herein are those of Marquette Associates, Inc. (“Marquette”), and are subject to change without notice. This material is not financial advice or an offer to purchase or sell any product. Marquette reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs.

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