Keys to unlocking the benefits of the IRA
Signed into law in 2022 and currently going through the rulemaking process, the Inflation Reduction Act (IRA) will dramatically increase the production and use of decarbonized fuels and clean products in the United States. To do this, the IRA’s funding and incentives are focused on creating complete, integrated clean energy systems.
This investment approach differs from the traditional approach taken by private capital, which focuses on generating outsized returns for individual companies. The IRA is different in several ways:
It focuses on large-scale infrastructure and system development. This scale of development usually cannot be addressed by private capital,
To win funding, companies must work together. and
The design invites companies to compete in building partnerships and communities.
Public funding designed in this fashion can deliver system-wide impacts through fostering a very different form of competition - the winners being those with the best collaborations. There are several key elements to this “cooperative competition” model worth highlighting:
Supply and demand of clean, decarbonized fuels are incentivized in a comprehensive way from building the manufacturing plants, to the sale of the products, all the way to the purchasers of these products,
Incentives are “stackable”, allowing for multiple participants to benefit synergistically – thus creating an overarching incentive to build community.
Many of the incentives and clean production pathways extend through 2032, providing the time and space to create and grow large multi-party ecosystems, and
Major bonuses, designed as multipliers, are built in as incentives for community benefits in the form of local hiring, apprenticeships and training.
This new approach has come at a critical time for climate finance. While a few massive corporations may be able to offer a completely vertically integrated solution, even the largest global players require upstream and downstream suppliers, customers, and partners. The vast majority of new clean fuels and products pathways will require building large value chains, or start-to-finish pathways, for the new clean products ecosystems needed to replace the existing polluting infrastructure. And all of these participants will need to be connected and deliver value to the local communities, economies and workforces where the projects are being built.
Leaders around the world are taking note of the IRA and we can expect to see more of these types of industrial incentive systems in the works (see recent developments in the EU). These emerging public incentive systems will help jump start and nurture new clean climate infrastructure ecosystems. We need to fully utilize this valuable public support now; we cannot afford to delay. We need an all-hands-on-deck, “partner up” approach to meet the goals of decarbonizing our economy.
We at ReCarbon see tremendous opportunities to work with partners and take advantage of this new climate financing. We have a breakthrough solution for turning harmful greenhouse gasses into valuable products like clean hydrogen, methanol, and sustainable aviation fuel. Our technology is proven and available today and will enable upstream and downstream partners to realize cost and carbon savings and create new climate positive value chains.
We can make it happen working together. Let’s do this.
If you are interested in connecting with us, please contact: hello@recarboninc.com