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Featured: Policy Corner
Eight ways the Inflation Reduction Act is resetting the climate table. The Inflation Reduction Act hasn’t yet passed the U.S. House of Representatives and already it is reframing narratives (the U.S. is a global climate leader!), reshaping assumptions about the role of climate solutions (deflationary!), and raising expectations for the green economy (jobs! jobs! jobs!). All told, the bill includes an estimated $369 billion in climate and energy-related investments, making it the largest-ever federal commitment to climate change action (for a full breakdown, check out this spreadsheet from Ben Beach of BlueGreen Alliance and this analysis from the CPC Center). “The private sector can come and build upon a very solid platform of incentives and guidance and industry-creation around this bill, and that’s really promising,” Stephan Nicoleau of FullCycle Climate Partners tells ImpactAlpha. From geopolitics to home appliances, here are some of the ways the bill is resetting the climate table.
- The U.S. can reassert global climate leadership. The bill puts the Biden administration within striking distance of its goal to halve emissions this decade. That “allows the U.S. to cement its global leadership on climate, compete with China on new technologies, keep pace with Europe’s actions, and show how growth in manufacturing can be tied to climate action and emissions reductions,” says Matt Piotrowski of Climate Advisers. Look for a reinvigorated COP27 in Egypt in November.
- Long-termism is in fashion. With solar energy and other incentives locked in for 10 years, the IRA breaks the short-term cycle that has long stymied private sector planning and investment. “The time frame is almost as important as the amount of incentives provided,” Rachel Kyte of the Fletcher School at Tufts University tells ImpactAlpha.
- Electrifying everything, faster. Consumer savings and incentives will drive a boom in heat pumps, electric vehicles and induction stoves. Third Sphere’s Shaun Abrahamson says the appliances will achieve “lower total cost of ownership, in large part because electricity prices won’t be subject to the type of volatility we see for fossil fuel-based systems.” Says the Coalition for Green Capital’s Reed Hundt, “We want Home Depot to be selling heat pumps, for them to be flying off the shelves.”
- Made in America, eventually. The bill includes $50 billion in tax incentives to boost domestic manufacturing of solar panels, wind turbines, batteries, and mineral mining and processing. The incentives are an attempt to cut the U.S.’s dependence on China and other countries. “This will prompt a wave of battery innovations,” says Spring Lane Capital’s Rob Day. Incentives for on-shoring clean tech supply chains will be a boon for U.S. workers in climate-related jobs.
- Environmental justice? The bill allocates $60 billion for environmental justice priorities, including pollution clean up and low-carbon retrofits in low-income communities. More than half of the $27 billion in a “green bank” fund is earmarked for disadvantaged communities. But advocates for community development financial institutions and minority-depository institutions object that many for-profit community-based lenders are excluded from the green bank fund. More broadly, some climate justice leaders in Black and Latino communities are calling out the bill for its continued support for fossil fuel development. “We have the bill. It’s not perfect,” says Nicoleau. “But ultimately, we have to think of this as the laying of a foundation, a really strong one.”
- Keep reading, “Eight ways the Inflation Reduction Act is resetting the climate table,” by Amy Cortese and Dennis Price on ImpactAlpha.
Dealflow: Community Finance
Ting Internet secures $200 million from Generate for communication infrastructure in communities. Cable internet versus fiber optic, you ask? A lower-waste footprint and lower-energy consumption makes fiber technology the more eco-friendly choice. Toronto-based Ting, a subsidiary of global internet services company Tucows, is looking to build communications infrastructure for more resilient and sustainable cities. Generate Capital’s expertise will help the company roll out its fiber network, said Ting’s Elliot Noss.
- Smart cities. Generate, armed with a $2 billion sustainable infrastructure fund, provided the preferred equity investment. Upon closing, Ting will receive $60 million. The rest of the capital will be allocated as Ting reaches operational milestones. Generate’s Andrew Marino said the partnership’s aim is to “drive resource efficiency for municipalities over the long term.”
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Forage secures $22 million to help low-income Americans order groceries online. About 42 million Americans receive help paying for groceries through the federal Supplemental Nutrition Assistance Program, more commonly known as food stamps. The average monthly SNAP benefit per person is about $175. But not many grocery stores accept SNAP benefits online. “Many SNAP recipients are homebound, lack transportation, or live in a food desert without easy access to grocery stores,” says the team at tech startup Forage. The company’s software helps online grocers and platforms such as Shopify accept SNAP electronic benefit transfers, or EBTs. Forage’s Series A round was backed by fintech investor Nyca, PayPal Ventures, EO Ventures and Instacart founder Apoorva Mehta.
- How it works. Forage helps merchants navigate the complex approval process and requirements from the U.S. Department of Agriculture, which oversees SNAP. It charges a fee for each transaction, similar to other payment companies. Transaction and delivery fees loom as an obstacle for low-income individuals and households; such fees cannot be paid for with SNAP benefits.
- Check it out.
Dealflow overflow. Other investment news crossing our desks:
- InfraCo Africa, the Africa-focused development arm of the Private Infrastructure Development Group, invested $43 million to launch a climate infrastructure fund.
- Utility Global secures $25 million in Series B funding to convert waste streams into low-cost and low-carbon hydrogen.
- Kenyan fintech venture FinAccess scored $500,000 from HAVAIC to provide software to non-traditional financial institutions in Africa.
Agents of Impact: Follow the Talent
Generate Capital promotes Peggy Flannery and Pietro Lomazzi to managing director of investments. Alex Raksin, ex- of Oaktree Capital, joins Generate, also as managing director of investments. Greg Richards, ex- of Energy Impact Partners, joins as managing director of credit… Yvonne Ofosu-Appiah of Wangara Green Ventures joins Impact Investing Ghana’s board of directors… UNDP seeks an English-speaking impact investing researcher for a six-month internship in Istanbul… UBS is hiring a writer to create sustainability and impact investing content in London.
The Federal Reserve Bank of New York will host “Transformative change in health equity through debt financing,” Tuesday, Sept. 13 in New York… The LHoFT is looking for fintech founders for its CATAPULT: Inclusion Africa Program… Ghana Tech Lab and Villgro Africa are accepting applications through Friday, Aug. 19 for their female-led health tech startups program in Ghana. Five startups will receive $50,000.
Thank you for your impact!
– Aug. 11, 2022