The $369 billion Cut Inflation Act passed by Congress includes the largest investment in US history to fight climate change. From tax breaks to direct subsidies, this has big implications for businesses in clean energy, clean manufacturing and clean innovation.
Its passage will be huge for startups in the climate space as well as the major venture capital firms that back them.
“Everyone wants to be part of it,” said Carmichael Roberts, co-head of the investment committee of Breakthrough Energy Ventures, the climate fund founded by Bill Gates. “The calls I’m getting now – huge, already, and there was already a big groundswell around the climate, but it’s only increased even more.”
Roberts said the ability to manufacture in the United States, through tax breaks and other incentives, is “transformative” for startups and will spur entrepreneurship. “I bet you there’s somewhere between 300 and 1,000 companies that will exist now because of this bill that wouldn’t have existed,” Roberts said.
Startups in the climate space are already applauding by the way. Here’s what the CEOs of some of the companies featured in CNBC’s Clean Start series have to say:
- BlockPower, which aims to electrify every building in America, expects to see big tax breaks for consumers and for the company itself. CEO Donnel Baird said the package “significantly reduces the cost for building owners and landlords of clean energy upgrades. It creates a new green bank to provide flexible capital to clean energy projects that Wall Street can exploit”.
- Electric Hydrogen builds systems to produce green hydrogen. CEO Raffi Garabedian said: “The policy rightly recognizes the power of hydrogen to decarbonize heavy industry…and has been designed to reward hydrogen producers who can minimize carbon emissions.
- Epic Cleantec builds on-site water recycling systems for urban buildings. Its CEO, Aaron Tartakovsy, said, “We’re thrilled to see $4 billion dedicated to helping Western states currently struggling with a very difficult drought, a challenge we are actively addressing at Epic.”
- Indigo Ag helps farmers earn money from carbon credits by implementing green agricultural technologies. “The proposed commitment of $20 billion [in agriculture subsidies] would allow farmers to plant the seeds for a meaningful, long-term and sustainable climate solution,” said CEO Ron Hovespian.
- CityZenith creates digital twins of cities and buildings, right down to their energy operations. In doing so, it helps cities and developers reduce their carbon footprint before construction even begins. “This news could impact our share price in the near future and facilitate the closing of a major institutional investment round later this year or early next year,” CEO Michael Jansen said. .
Perhaps the most significant impact is that government investment in climate initiatives and innovation will give private investors much more confidence in the climate space.
“Venture capital dollars will come in much faster from areas that may not have invested in an area, but now all of a sudden, see, wow, we’re going to have a real path to scale with the best and the brightest people and the best companies created. That’s what this bill does overall,” Roberts said.