Is the Inflation Reduction Act a Tipping Point in Climate Action
Insights from 25-plus Credit Suisse research teams around the world reveal how the IRA impacts clean energy, utilities, oil & gas, industrials, passenger and commercial transport, metals & mining, buildings, and renewable/battery global supply chain.
Given the uncapped nature of tax credits and the attractiveness of its economics, our estimates suggest the ultimate public climate spending enabled by the IRA could be over $800 billion. With subsidized green financing and the multiplier effect on federal grants/loans, the total public plus private financing could reach ~$1.7 trillion over 10 years. Most of the upside comes from solar, wind, battery deployment/manufacturing, clean hydrogen, and carbon capture.
The US is already the world's largest fossil fuels producer. Given its competitive advantage in low-cost clean electricity and hydrogen production, infrastructure, geologic storage, and human capital, the US is well-positioned to also become a global leader in clean energy. IRA could turn the US from an importer of solar modules and wind turbines to an exporter; it also accelerates hydrogen and CCUS developments which can unlock other opportunities in clean fuels export, CO2 removal, and utilization. For corporates, IRA changes the narrative from risk mitigation to opportunity capture.
IRA is transformative for the entire clean electricity ecosystem; industrials/chemicals/oil & gas should benefit from growth in hydrogen and carbon capture; metals and critical minerals producers in the US and FTA countries should see robust demand.