What Investors Need to Know About the Climate Bill

EWG (Environmental, Social, and Governance) Investing is becoming an increasingly popular corner of the market for both ethical and financial reasons. But as extreme weather conditions continue and scientists warn of fire and famine, investing in companies that meet certain environmental standards is no longer niche but necessary. And a new U.S. climate bill may make it more profitable.

The recently passed climate bill, which President Biden signed into law on August 16, 2022, calls for $433 billion in spending — $370 billion of which is dedicated to climate change and clean-energy production.

As an investor, the climate bill spells out industries that are poised to grow exponentially in the coming decades. Many companies in these industries might be private or not even exist yet. Only through verified investing can investors be at the forefront of investments in innovative private markets such as these. To be one of these investors, you’ll need investor accreditation. If you meet the criteria, you can become verified quickly through Verify Investor and become eligible to invest in groundbreaking new technology and businesses.

Let’s explore what the new bill entails and how it will benefit specific sectors.

What is the Climate Bill?

The newly minted climate law, called the Inflation Reduction Act, is a massive climate and social spending package geared to fight climate change.

Some of the key attributes of the law include:

• Incentives for private companies to produce more renewable energy, including solar panels, wind turbines, batteries, and critical minerals processing,

• Investment in clean technology manufacturing facilities, i.e., those that make electric vehicles, wind turbines, and solar panels

• Grants to retool existing auto manufacturing facilities and new facilities to manufacture clean vehicles

• $2 billion for National Labs to accelerate breakthrough energy research

• Tax credits to help Americans lower their emissions, i.e, by installing solar panels on their homes and driving electric vehicles

• Grants and tax credits to reduce emissions from industrial manufacturers like chemical, steel, and cement plants.

• $27 billion clean energy technology accelerator to support the deployment of technologies to reduce emissions, especially in disadvantaged communities

With these actions, it aims to reduce carbon emissions by 40% by 2030. In addition to the climate initiatives, the package contains social spending as well to lower the prices of prescription drugs and expand Medicare benefits.

The Future of Environmental Investing Looks Bright

For investors, the Inflation Reduction Act should spur further investment in companies that will benefit from the grants, tax credits, and investments outlined in the law. It provides greater clarity around the future of clean energy and can give current and hopeful ESG investors more confidence.

However, there are many factors to consider.

Two-thirds of publicly traded companies that make up the S&P 500 have set emission reduction targets, but most have little progress to show for it so far. Making the necessary changes is both difficult and costly, but the incentives outlined in the new climate bill may help them align their efforts and achieve emission goals.

Companies that are already on the right track or newer businesses that are creating clean energy sources will likely experience fewer hurdles than long-standing businesses that will need to make costly adaptations to achieve net-zero emissions. These businesses could present unique investment opportunities in the coming years.

Regardless of where you choose to invest, knowing how the Inflation Reduction Act will impact a multitude of industries over the next decade is integral to a successful strategy.