New Investment Opportunities in the Greening Economy for Private Client Investors via the Inflation Reduction Act (IRA)

Semester

Fall 2023

The Capstone project evaluated the impact of the 2022 Inflation Reduction Act (IRA) on various business sectors focusing on investment opportunities enabled by IRA for Citi Global Wealth Management clients. This report examined the IRA's progress in its first year, especially in incentivizing private investment in the less established sectors linked to climate change mitigation.

The report identified six commercially challenged sectors that stand to benefit from IRA's new and expanded tax credits, including Clean Hydrogen, Utility-Scale Battery Energy Storage Systems (BESS), Clean Commercial Vehicles, Biofuels, Sustainable Aviation Fuels (SAF), and most importantly domestic Manufacturing of components for wind, solar, batteries and critical minerals where IRA’s overlapping subsidies for US producers and buyers of equipment with US content are expected to be most impactful.. The report delved into the IRA's provisions for these sectors, their challenges, and their prospects for growth.

The report approached this research with a structured analysis of recent developments in the selected sectors, identifying the leading publicly listed market participants. A two-factor sorting matrix was employed, ranking companies based on market leadership and sector prioritization. This assessment identified companies theoretically poised to benefit from the IRA's incentives. Serving as a guide for further research rather than definitive investment recommendations, the report aims to assist Citi Global Wealth Management in understanding the IRA's influence on new investment prospects for its clients.