WASHINGTON – The climate law signed by President Biden in 2022 has sparked a surge in investments into the United States’ clean energy sector, simultaneously creating a lucrative market for green tax credits. Financial firms like Generate Capital are at the forefront of this emerging market, facilitating transactions between smaller energy companies and larger corporations that can fully leverage these incentives.
This burgeoning marketplace is expected to see an annual transaction volume of $80 billion dedicated to climate change initiatives. Clean-energy producers are finding it financially advantageous to sell their tax credits, typically receiving between 75 to 95 cents on the dollar after intermediaries take their fees. These transactions not only provide immediate capital for smaller firms but also offer larger corporations fiscal benefits that outweigh the risks associated with project shortcomings, which are often mitigated through mandated insurance.
The rise of specialized online platforms like Crux, created by Alfred Johnson, and Atheva, developed by Seth Feuerstein, is streamlining the buying and selling of these tax credits. These platforms have filled a crucial gap in the market by connecting credit sellers with potential buyers efficiently.
Although the Treasury Department has initiated a pilot registry to track these clean energy projects, the platforms facilitating these transactions remain outside of government regulation. Deputy Treasury Secretary Wally Adeyemo has expressed support for this approach, noting that selling tax credits can be more financially beneficial for clean-tech companies than pursuing high-interest loans. The success of this market underscores the impact of governmental policy on fostering innovation and investment in sustainable energy solutions.
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