Analysis of Carbon-Reducing Investments that are Supported by the Inflation Reduction Act

In accordance with Crédit Agricole CIB's (CACIB) 2050 net-zero climate commitments, the Capstone team was tasked with identifying clean energy projects in the U.S. that offer attractive returns and carbon reduction benefits in the context of the Inflation Reduction Act (“IRA”). The team was also asked to identify industry players with strategic advantages that allow them to benefit from the IRA’s novel tax credits. To achieve this, the Capstone team evaluated five clean energy technologies (onshore wind, utility-scale solar, lithium-ion battery storage, “green” hydrogen, and carbon capture, utilization and storage) across four US growth regions (Central MISO, ERCOT, Western PJM, and the Pacific Northwest). The team compiled cost components and operating characteristics for the different technologies over time and analyzed how IRA tax credits impact project economics, to produce a Levelized Cost of Electricity (“LCOE”) for each technology and region. Different revenue drivers that impact project returns, including the availability and quality of offtake opportunities and differences in potential merchant revenues were considered. The Capstone team then quantified the avoided lifetime CO2 emissions for each technology type in each region per dollar invested. By synthesizing results from the environmental and economic analyses, the team identified the best technology-region pairs that get CACIB to its net-zero goals the fastest.