Biden’s climate law enriches middlemen: Impax

Impax Asset Management, which hailed the Inflation Reduction Act as a game changer shortly after it was unveiled in mid-2022, now says the legislation has too many built-in hurdles that are delaying implementation and enriching middlemen while leaving less money for green projects.

The IRA’s clean-energy tax credits are an important part of the bill, but they’re also “overly complex from a financial structuring point of view and not lending themselves very well towards a replicable, scalable system,” according to Charlie Donovan, senior economic adviser at Impax.

The upshot is the US has “set that whole system up to be dependent upon a few industries of which the banking industry is one,” Donovan, who’s also a professor at the University of Washington, said in an interview. “The tax consultants — and the banks arranging it — have made a lot of money, but it doesn’t lend itself to a really efficient, fluid system in which you can push a lot of money at scale.”

The comments follow a year in which the initial fanfare surrounding the IRA has been tempered by the administrative rigmarole of trying to channel billions into the real economy. BloombergNEF says the law may cut US energy-related emissions in half by 2050 from 2021 levels, if it’s applied properly. But it’s up to US agencies, including the Treasury Department, to write the actual rules that will determine how all the tax credits are implemented in practice, BNEF also notes.

Impax, which oversees about £40 billion ($50 billion) in assets, was among the first big sustainability-focused investors to welcome the IRA as a bill with the potential to change the future of green finance. One year ago, Impax said it was reviewing its portfolio with a view to getting maximum mileage out of the new legislation,…