A look under the hood of the IRA
During a recent event, Omer Farooq, Head of Sustainable Asset Finance, Bank of America, explained key elements of the Inflation Reduction Act. Watch to learn about a sea change for businesses small, medium and large
Thinking a decade ahead is no easy feat in the business world. Changes in policy, climate, markets, technology and more can quickly upend carefully conceived plans. Which is why the Inflation Reduction Act (IRA) is such a unique and significant opportunity for companies across many industries. Touching nearly all parts of the global economy, the IRA provides dependable, stable incentives for clean energy and decarbonization solutions through at least 2032. With more than $700 billion at stake, the opportunities are significant, but making sense of them is not a straightforward exercise.
“We’ve had more than 23,000 sustainability conversations with our clients this past year,” says Matt Elliott, Sustainability Executive, Business Banking and Global Commercial Banking, Bank of America. “One of the most common themes that comes up is Net Zero and what to do about it — so the Inflation Reduction Act couldn’t be more relevant, or more in need of explanation.”
While there are numerous takeaways from the Act, Omer Farooq, Head of Sustainable Asset Finance in the Global Sustainable Finance Group at Bank of America, explains three critical elements of the IRA:
- Tax credits (based on the commodity (such as energy) produced and sold)
- Investment tax credits (based on the qualified investment in the project and generally equal 30% or higher of the qualified investment depending on certain conditions)
- Transferability, which allows an eligible taxpayer to either buy or sell certain tax credits, giving businesses another monetization route.
Additionally, The Inflation Reduction Act: A Long Game outlines the regulatory policies, critical timetables and business benefits the law offers. To learn more about how major trends — including renewable energy becoming the mainstream energy of the future — are shaping the years ahead, visit the Bank of America Institute for similar insights and expertise.