Introduction
Driven by recent policy actions that include substantive onshoring provisions, we believe the US decarbonization investment theme is poised for unprecedented growth. Technology maturation, favorable unit economics, rising demand, and public and private investment in the sector are creating in our view historical market opportunities across energy efficiency, low carbon mobility, and clean energy value chains.
The Inflation Reduction Act (IRA), signed into law in August, contains over $60 billion to onshore clean energy manufacturing. In fact, the bill’s tax credit provisions will lead to much more spending to fight climate change with the Congressional Budget Office estimating the potential spend at $374 billion while recent market reports put the bill’s impact at closer to $800 billion. Over the next decade, Credit Suisse puts climate spend in the US at $1.7 trillion while a Princeton University Zero Lab analysis puts the number at nearly $3.5 trillion3.
Despite a looming economic downturn, this unprecedented coupling of demand and concerted public and private sector investment is set to transform the US investment landscape for years to come. Tikehau Capital’s long-standing decarbonization conviction will continue to guide our investment priorities as we explore these growing opportunities in the US market.
The US Decarbonization Imperative: Once in a Generation Market Opportunity