Rachel’s note: On Friday, Congress passed the Inflation Reduction Act.
Despite the name, this legislation won’t immediately reduce inflation…
But it strongly focuses on energy security and climate change investments… lighting a fire under the clean energy transition.
The Act is funding clean energy manufacturing across solar, wind, nuclear, and hydrogen power, as well as electric vehicle (EV) factories. It also provides tax credits and rebates for a number of renewable energy initiatives.
So today, Nomi Prins – Casey Research colleague and financial expert – will explain the Act in detail, how it’s being received by the clean energy sector, and how everyday investors can profit from the countless opportunities…
By Nomi Prins, editor, Inside Wall Street With Nomi Prins
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A new flood of money is coming out of Washington…
The $740 billion Inflation Reduction Act of 2022.
The Senate voted to pass the Act last Sunday. And on Friday, the House passed the act as well.
The IRA covers a lot of ground – from Medicare to biofuels to the Affordable Care Act.
And while it may turn out to be merely incidental in reducing inflation…
It does light a fire under the energy transition.
Today, I’ll give you one way you can position yourself to profit. But first, let’s take a closer look…
A $369 Billion Win for the Energy Transition
The IRA’s focus on energy security and climate change investments is vast.
Half of it, or a $369 billion investment, is set to stream into domestic materials, supplies, and technology.
It will also go toward production, manufacturing, and upgrading of the U.S. energy space.
And remember, this isn’t the only big move the government has made recently to push green energy forward.
On November 15, 2021, Washington also passed the $1 trillion Bipartisan Infrastructure Act.
The Infrastructure Act included $88 billion in clean energy methods, electric vehicle production, power grid upgrades – plus $55 billion in investments in clean water.
The Inflation Reduction Act adds to this.
It includes another $60 billion for clean energy manufacturing across solar, wind, nuclear, and hydrogen power, as well as electric vehicle factories.
It also provides funding for technology investments across the supply chain. That includes incentives for the sourcing and production of the U.S. materials needed for the energy transition.
Altogether, these are some of the areas the Act covers:
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$30 billion in funds for U.S. electricity transition projects. That money would accelerate the speed at which major power and utility companies are transforming their existing grids and installing more clean energy technology.
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$20 billion in loans to build new, clean EV factories.
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$27 billion to develop clean-energy and carbon-reduction technology.
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$1 billion to develop heavy duty EVs. That includes the production of electric school buses, mail trucks, and other larger vehicles.
The IRA also includes tax credits and rebates. Those will be across a wide spectrum of clean energy materials, manufacturing, and power.
That includes tax credits for:
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Clean hydrogen power
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Nuclear power
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Residential clean energy
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Commercial clean vehicles
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EV charging stations
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$700 million of additional uranium funding
And when Washington allocates money, Wall Street follows…
What This Means for Wall Street
The IRA was well received across the country by industry insiders that power our homes today and will produce the energy to power them tomorrow.
There was no shortage of applause for the clean energy money and attention from the Inflation Reduction Act. It spanned a variety of private companies and trade groups around the country.
That’s because it touches a variety of alternative energy businesses – from solar to wind to nuclear.
And these are areas involved in the energy transition away from fossil fuels, even while fossil fuels remain the dominant power source.
For example, here’s what Nat Kreamer, CEO of Advanced Energy Economy, said:
Rising inflation and global instability have put America’s energy security in jeopardy. A federal clean energy investment of this magnitude is our best defense.
The Advanced Energy Economy is a national trade association of clean energy buyers and businesses.
And that wasn’t all. The wind sector also chimed in.
The Business Network for Offshore Wind (BNOW) was thrilled about the funds allocated for offshore wind development projects. Its CEO, Liz Burdock, said:
The bill’s $40 billion investment in domestic clean energy manufacturing and shipbuilding is an important down payment that will unleash the vast potential of offshore wind.
And to top it off, Zach Friedman – Director of Federal Policy at Ceres – said:
Nearly 2,900 companies with more than $4.6 trillion in annual revenue and more than 400 million global employees have participated in corporate America’s year-long push for federal legislation to invest in clean energy, clean transportation, advanced manufacturing, domestic supply chains, climate resilience, environmental justice, and resilient agriculture.
Ceres is one of the most influential nonprofits on corporate governance.
All of this shows why companies in the clean energy space were so happy the Act passed.
What This Means for Your Money
Shares of clean energy and material companies rallied last week, after the Senate approved of the Inflation Reduction Act. This pattern continued after the House passed the IRA.
Solar, EV, fuel cell and materials companies all benefited from investor enthusiasm. Just take a look at this example below.
And I expect that to continue in the months and years ahead. So how do you take advantage of this?
One of the best ways to capture broad upside right now is the iShares Global Clean Energy ETF (ICLN).
It holds close to 100 clean energy companies across different industries – including utilities, industrials, and information technology (IT).
Now is an excellent time to get in. It’s also a great time to increase your investment if you’re already participating.
Happy investing,
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Nomi Prins
Editor, Inside Wall Street With Nomi Prins
P.S. As I mentioned above, the Inflation Reduction Act won’t play a huge role in reducing inflation in the short run… But it will light a fire under the energy transition.
Companies with domestic sourcing – or that are involved in the clean energy or manufacturing space – will see the most upside. And at my Distortion Report advisory, my team and I are following the money to find those companies for you.
In fact, I just put my boots on the ground – to check out the first gas station in America to no longer pump gasoline. And what I found out could have huge implications for your portfolio. You could potentially double, even triple, your money over the next 12 months. To learn more, don’t miss this video report I put together for you.