Renewable Energy SmartPod
Renewable Energy SmartPod
Congress Takes Aim at Tax Incentives in the Inflation Reduction Act
Sponsored by KPMG
Negotiations currently taking place on Capitol Hill stand to have a dramatic impact on tax incentives in the Inflation Reduction Act that have powered tremendous growth in clean energy and domestic manufacturing. With so much chatter coming out of Congress, Alfred Johnson, the co-founder and CEO of Crux, and Lauren Collins, a partner at Vinson and Elkins LLP, return to the show to help separate the signal from the noise -- or in this case, decipher the difference between a scalpel and a sledgehammer.
Insights from Crux (updated May 22, 2025)
Insights from Vinson & Elkins LLP (updated May 22, 2025)
More resources from KPMG
Shaping the Future of Renewable and Emerging Energies
(Note: This transcript was created using artificial intelligence. It has not been edited verbatim.)
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Sean McMahon
What's up everyone? And welcome to the Renewable Energy SmartPod. I'm your host, Sean McMahon, and if you're listening to this podcast, then you probably know about the negotiations taking place in Washington, DC right now that stand to have a dramatic impact on the clean energy aspects of the Inflation Reduction Act. Some of the tax incentives within the IRA have powered tremendous growth in renewable energy and domestic manufacturing, but with some of those very same tax incentives appearing to be on the chopping block, I've invited a couple of guests back to the show to help make sense of everything I'm talking about. Alfred Johnson, the co-founder and CEO of Crux, and Lauren Collins, a partner at the law firm of Vinson and Elkins. With so much chatter coming out of Capitol Hill, Alfred and Lauren are here to help separate the signal from the noise, or I guess in this case, sort out the difference between a scalpel and a sledgehammer.
But before we dive into a deep conversation about tax incentives, just a quick reminder that if you want a daily dose of renewable energy news delivered directly to your inbox, head on over to smartbrief.com and sign up for the renewable energy SmartBrief, or just click on the link in today's show notes.
Alrighty, things are evolving rapidly on Capitol Hill, so let's bring in Alfred and Lauren to get this conversation started. Alfred, how are you doing today?
Alfred Johnson
Hey, Sean, good to be back with you.
Sean McMahon
It's great to see you again. Lauren, of course, I got to welcome you back to the show. Obviously, this appearance is only gonna help you extend your lead as the most frequent guest on this podcast.
Speaker 1 2:26
Oh my goodness, what do I get? I don't know.
Sean McMahon 2:31
I think you know, SNL, they give out like a jacket or something like that when someone hosts five times. So I gotta find some kind of award for you. I'm excited to bring you both in because you've both been on in the past, we've talked a lot about tax credits. And anyone who's paid attention to the news these days knows that the future of the IRA tax credits is being debated pretty feverishly right now on Capitol Hill. So I want to dive into what's proposed right now. And when I say proposed, I should stipulate that we are recording this May 21 at 1pm Eastern, which of course, means that something will move on this right after we stop recording. But anyway, I want to get your initial reactions. So let me start with you. Alfred, when the reconciliation bill came out, what were your thoughts?
Alfred Johnson 3:16
So, Sean, we've been waiting for this for a very long time it was presumed that the legislation would cover the clean energy tax credits, even before President Trump was reelected, and there was a long debate as to whether or not they would do one bill or multiple bills. Ultimately, the one bill idea prevailed. The bill is even named the one beautiful Bill act. So we knew that this was coming. There was long engagement with the house, Ways and Means Committee about what would end up coming out. Ultimately, the presumption was that the credits, which are currently mostly extended well into the 2030s based on the way that the law is written, would be rolled off sooner, so they would end in some earlier date than 2032 or whenever we reach 25% of 2022 greenhouse gas emissions levels as it is currently written. What ended up coming out of the committee was that most credits would phase out with the full reduction of the credit to zero in 2031 that was a bit longer than people were expecting. So there was a lot of expectation that we would see phase outs as soon as 2028 2027 so that exceeded expectations. The other way in which this was constructed was to end transferability, the ability to sell the credit to somebody else for cash at the end of 2027 so there would be roughly two more years of. Transferability, and then we would presumably revert into the tax equity market for those that would have access to it. That is a particularly problematic idea for newer technologies and categories like nuclear, where tax equity is is not viable. So transferability, being separated from the tax credits is something that was worse than some expectations, though better than where we may have landed. There was some suggestion prior to the text that transferability could be repealed entirely. It was not. And then there were a number of other restrictions that have been added into the legislation meaningfully for an entity of control, provisions that are much more restrictive than previously existed. And then some categories of credits have been wiped out entirely in the House legislation. So 40 5v that hydrogen credits, credits relating to EVs, have been wiped out entirely as of the end of 2025 I think much of that was expected, at least for electric vehicles, less expected for hydrogen. So I think as you go credit by credit, there were some categories where the industry did better than expected, some categories where it did worse. And then we need to, of course, pause on the fact that this is the first step in a much longer process. We are in a multi month process, and we anticipate that coming out of the other side of it, the Senate, will be a further moderating force, and the ultimate piece of legislation that comes out of Congress and then signed by the president should be better than whatever clears the house in the first instance.
Sean McMahon 6:46
Yeah, for sure. I mean, we've got a long way to go before anything is finalized. And you mentioned the transferability of tax credits. Obviously, that's near and dear to you and the team at crux, and I want to dive into that a little later. But first, Lauren, what was your initial reaction when you saw the reconciliation bill come out?
Lauren Collins 7:04
Yeah, well, so I'll caveat that my initial reaction is different than my current feeling about it. My initial reaction was similar to Alfred's, where it's kind of a mixed bag, like some technologies like RNG came out looking pretty good, the tech neutral credits kind of came out in the middle, and then on the individual front and the resi solar front, they were really kind of just cut off at the knees. So it really was a mixed bag initially, when I was first looking at it, and there was a little bit of relief that the technology neutral credits and transferability at least had some runway for a few years, having dug into the text of the bill more the foreign entity issues that Alfred highlighted have made it clear to me that even for technology neutral credits, where we thought we were more in the clear, there are some really serious restrictions in this bill that will effectively disallow those credits if they're enacted in its proposed form, as with Alfred, I'm hopeful and expecting that it will not actually be enacted in its proposed form, and there's still lots of work to do. But if we just look at the legislative text, having had chance to look at it and digest it, I think we should view this as across the board, pretty negative for the clean energy industry.
Sean McMahon 8:25
Yeah, you mentioned the foreign entity of control, and we talked about the transferability aspects, any other areas of concern?
Lauren Collins 8:31
Hydrogen. You know that that credit was completely disallowed for any projects beginning construction after this year. That puts a lot of projects at risk of not being constructed at all. And so that industry is obviously very focused on this bill, and will be lobbying hard, and hopefully we'll have some wins there. And I think then, I think that the timeline is restricted, you know, I'd love to see there be more time for the technology neutral credits, again, transferability. We'd love to see more runway there. As Alfred can attest to, transferability has been incredibly impactful and efficient and has done a great job of encouraging investment in this market. And in my personal opinion, it's very short sighted to limit it at all. You know, it really should just be based off of how long the credits are otherwise available,
Sean McMahon 9:21
yeah, so let's dive into the transferability aspects. Alfred, what kind of impact would this have on the market for transferable tax credits?
Alfred Johnson 9:29
Yeah. so Sean, let's back all the way up. So we have used tax incentives for energy for a very long time, for more than 100 years, for oil and gas drilling and for clean energy in various forms. For decades, the problem with tax credits is that they generally accrue in some large portion to developers, manufacturers, companies that are unable to use the credit in their full form, and that has led to the formation of a market. Call it the tax equity market, where investment is made into the asset, and that is a mechanism by which the credits from the asset can be distributed to another company that pays a sufficient amount of taxes to value those credits. That has been an effective market for the largest wind and solar developments for a couple decades, but it is a very expensive and inefficient product that is largely provided by the largest banks. So Bank of America, us, bank, JP, Morgan, make up about 60% of that market, and they're doing really important work. They're driving billions of dollars into the projects, but it is a mechanism that is generally inaccessible for smaller projects and projects that are related to technologies outside of wind and solar. What the IRA did was take a bunch of tax credits, some of which had existed for a long time, like the ones associated with wind and solar, and some new ones, like new ones associated with manufacturing and critical minerals and nuclear and a new concept of tech neutral that brought in other categories like geothermal and hydro and allowed for those credits to be transferable in most cases for as long as the credit was available. That, as Lauren said, created a much more efficient market than the precedent market, because instead of now having to have a investor in the asset that was redeemed some amount of the tax credits associated with the asset, you could just sell the credits as a developer or manufacturer for cash to somebody else. It's a simpler transaction than tax equity, we see most production tax credit deals consummated in less than six weeks. For investment tax credit deals, we see most that are completed in less than three months, and the costs associated with transacting are just lower that is allowed for the formation of other liquid capital markets on the perimeters of the transferable tax credit market like a increasingly available bridge lending market for transferable credits. So this has been a very successful program that has led to a lot of new investors participating in the market. We see that evidenced in the price that these credits are trading at for production tax credits, we see the average price, gross price that is paid by buyers at about 95 cents. That is considerably better than state tax credit markets that are transferable. It's better than the price of low income housing tax credits on a moving average basis, and that happened within two years, it has also allowed for new technology categories like advanced manufacturing to get funded at much more, much higher levels and much more efficiently than they would have been previously. Those facilities are now benefiting substantially from tax credits that are transferable. Advanced manufacturing credits made up about 50% of the market in 2024 so I think as we consider the political reality, policy reality of where we are, we have found a very effective mechanism. And I think it's interesting to see legislative proposals as we sort of enter this new geopolitical frame that we are in, where the United States is aware and investing more in domestic energy and supply chains. It's interesting to see proposals start to emerge about using transferability for other categories. There's a piece of legislation that Todd Young, the Republican from Indiana and the Senate put forward to use transferability for an investment tax credit associated with building ships in the United States. Like I think, as we encounter the success of the mechanism, Congress will be tempted to use it in other places. And it is interesting Sean that the way that they constructed the repeal of transferability within the House legislation within the mark that came out of the committee was to repeal it within two years at the credit level. So they didn't take it away entirely. They didn't repeal the section of the tax code that responds to transferability, potentially indicating that it is seen to be effective mechanism as we think about the use of credits in all kinds of segments of the economy.
Lauren Collins 14:28
Two things I wanted to add to that is, because they did it on a credit basis, the date in which you lose transferability depends on each credit. You know, Alfred's referred to kind of two years. But for some like the tech neutral credits, it's actually based off of beginning construction. So you have to begin construction on the facility within that two year period, really by the end of 2027 and then you'd be able to kind of lock in the ability to transfer those credits, so long as you had. Done construction. So that is why, for some of the credits, we're happy to see a little bit of runway for transferability. By no means is it enough, but it does give a little bit of leeway there for some of those credits. So we're happy to see that. Love to see that applied for all the credits, and particularly an extended period of time, obviously. But the other thing I want to note is why transferability is so good, is it's also brought in other market participants, right? Like Alfred, you talked about the technologies, but it's also brought in investors who can, you know, be part of the renewable energy transition without actually having to invest as an equity investor. They can buy a tax credit, which essentially acts as a form of investment and finance of these assets. But again, it's much more efficient, and you don't need to be a giant bank in order to do it. You can be a small corporate who's just interested in this industry and wants to make an investment in an area that that you believe in, and it's mutually beneficial, and so we're kind of hamstringing the ability of more players in the market if we get rid of transferability, which feels kind of patently unfair.
Sean McMahon 16:11
Yeah, to that end, Lauren, you know wood, McKenzie, just came out with a report recently that talked about third party ownership, and this is specific to non residential projects for solar in the US. And the stat kind of jumped out at me. It's like 72% of the market share for ownership of those projects is third party ownership. So like you said, it's kind of bringing new investors to the marketplace. And I mean, what happens to that number if this goes away,
Lauren Collins 16:36
If we are stuck with this legislation, and you know, we are going to lose transferability for some of these things. My hope is that some of these market participants who've learned about the market and will continue to learn about it over the next couple of years, might be able to come in as equity investors and would be interested in doing tax equity style transactions. Certainly, we've seen lots of folks get educated on the way that tax credits work, and so again, that's an optimistic viewpoint, so I don't think it goes down to zero, but it's definitely going to be much lower than what it currently is.
Alfred Johnson 17:13
Sean, I would just pull us up a level here and observe a few realities in the way that the market for energy and supply chains is reconstituting right now. So energy demand is at the highest levels we have ever observed. There's a lot of talk about the demand that is coming from data centers. But in the grand scheme of things, while data centers are a very quickly growing demand source. They are a small piece of what's driving the aggregate demand. It's coming from buildings, the electrification of everything, clean transportation, all of which is putting more demand on domestic infrastructure. We are seeing a generational reinvestment in manufacturing capabilities in the United States. A huge amount of investment has been announced and started relating to different aspects of the supply chain, particularly related to the battery supply chain that is happening in states like Georgia and South Carolina and Texas and Tennessee in very large quantities, and there is an increasing awareness that United States should have more control over domestic supply chains for critical minerals, and that is particularly acute as we observe a environment of increasing competition with China, and even the restriction of certain rare earths entirely from distribution from China, which is a huge problem for the energy industry, aerospace industry, manufacturing in general. So those are the realities, right? The reality is there's a ton of demand, there's a ton of manufacturing that's happening. There's a need for more domestic supply chains. The Biden administration had relied on industrial policy to do that. The inflation Reduction Act was one of the pieces of industrial policy passed during that era, alongside the chips act and bipartisan infrastructure law, the Trump administration seems to be dedicated to using trade policy to achieve somewhat similar objectives, create more domestic supply chain for the things that we want here. And so that context, I think, undergirds the way that we ought to think about the markets for project finance, around energy, manufacturing and materials, and in that context, there will be segments of the market where demand for the project remains really high, irrespective of policy, right? If you're building a data center and you need reliable power, and one of the. Aspects of that is an on site battery that you plan to locate at the data center. It's not like you aren't going to build that. If the tax credits go away, you'll build it. The price of those things may need to adjust, and the debt capitalization of those things may need to be higher as a proportion of the capital stack, but the asset will still be built. And from that view, I think we will see trillions of dollars that are invested in the industry, broadly speaking, over the next few years, over the next 10 years, it will have a different composition than it might have had the policy environment not changed, but it will still flow. And in that light, I think we will see a lot of changes in the way that ownership is constructed, the technologies that are favored and not but everything still comes downstream of the economic and energy realities that we live in.
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And now back to my conversation with Lauren Collins from Vincent and Elkins and Alfred Johnson from Crux
Sean McMahon
so you mentioned technologies that are favored and not so. What technologies in the renewable energy space do you see might be particularly harmed the most or helped the most by the reconciliation bill as it stands right now?
Lauren Collins 22:13
Yeah, I would say in terms of benefiting, RNG got some wins in the bill. The 40 5z clean fuel credit was extended, and I actually expect there'll be some additional improvements as that bill moves through the Senate. So that industry has fared fairly well, considering, as we're talking about, resi solar, EVs, other clean vehicles, you know, clearly very harmed by this bill, and then everything else in the middle, kind of the traditional energy projects, you know, I think we really need to drill down on the foreign entity issues. Those, not to overstate it, really are disastrous for much of those credits. You know, Alfred touched on the idea that the inflation Reduction Act was meant to encourage domestic manufacturing, and with the way that the rules are currently written, I actually think that we're going to lose a lot of the onshoring that had been in process because they're so hard to comply with that people won't bother so while folks may still construct an energy storage facility next to their data center. It may not be with domestic products, because we've now gotten rid of the main incentive that was helping bring a lot of the manufacturing of the components that go into that storage facility on shore. So I think it's actually had a kind of negative impact on what was a pretty good policy goal that I think most people agreed with, again, bringing manufacturing onshore because it's written so so restrictively for all the technologies, I think it's going to negatively impact all of those.
Alfred Johnson 23:51
Yeah, I agree with everything that Lauren said, one category that I think is harmed in a way that is surprising given the amount of political support that the category has, is new technologies, broadly speaking, and nuclear. So if you're developing geothermal, for example, those projects are set to be delivered much later than a net new community solar development that can be built in 15 months. And if you're talking about nuclear facilities that are going to be brought online, most people think that that will happen in the 2030s not the 2020s and that means that if the implication of this law is to take away the credits and or transferability sooner. If you're in residential solar or community solar or batteries, you can build much more quickly because they're developed markets. If you are in newer categories, then you will have a much harder time with it. And there's also the impact to the financing markets, of course, right? Where, if that geothermal facility that was due to be delivered in 2028 with an accompanying tax credit, no longer can rely on the ability to monetize that credit, what happens to lending that might be related to the facility? It becomes much harder to secure. So I think there's a lot of aspects here that when you listen to what the poly policy positions are of Republicans in Congress or the administration that aim to actively support nuclear, critical minerals, geothermal, hydro, these categories and legislation currently, as written does not do that.
Sean McMahon 25:39
Agreed. So would either of you expect to see that changed? We've talked about how this is a work in progress. What areas you think might be, I guess, protected by the final version of the bill? Might be the wrong word, but we'll go with it.
Lauren Collins 25:54
I will caveat - this is not my area of expertise. You know, following the legislative process, but I've learned a lot over the past couple weeks. You know, I am very hopeful that as the bill gets to the Senate, we will see much more reasonable provisions around the foreign entities those various restrictions. I do think that you know, anyone that is listening to this podcast clearly has an interest in this industry. They should be calling their senators. They should be demanding that changes be made. They should be explaining the really disastrous impacts of these provisions. I'm hopeful that, you know, Senate Finance Committee will understand these issues, perhaps better than than the House did, because it was, I think, focused on other issues like salt caps and the like. So I think that is an area where we will see improvement. I'd also expect to see maybe some some loosening of the deadlines for termination of the credits across the board. But I don't know that I'm expecting anything dramatic in terms of, you know, one industry versus the other. I'd like to see just kind of across the board improvement,
Alfred Johnson 27:02
Yeah, Sean, I think the best you can do in terms of forecasting what will happen is to look at what people have said. And in the Senate, there are four senators that put out a letter in active support of clean energy tax credits. Those are Murkowski, Curtis, who was previously the chair of the House climate Republican conservative Climate Group, Tillis from North Carolina, who's in a very difficult reelection race, and Moran. And then, since the House legislation was proposed by the Ways and Means Committee, we've seen additional support communicated by a number of other senators. Kevin Cramer came out and said that the tech neutral credits should have longer phase outs, specifically for the reason that I just talked about in that it is needed to support new technology categories. Shelley Moore Capito has been a very long time supporter of 40 5q the carbon capture credits, and just by the way that the law was written with Joe Manchin as the deciding voice, there are a number of aspects of the law that are well situated and supportive to West Virginia. So I think she is anticipated to be an advocate for the clean energy tax incentives. John Hoeven from North Dakota, similarly, came out. Thom Tillis reemphasized the importance of transferability at a public event. So you know now you're talking about seven, eight senators who have gone out of their way to say that this is a priority, and I think that that is good indication that when this is considered in the Senate, it will receive more thoughtful treatment and will emerge in a different and better place.
Sean McMahon 28:54
I kind of want to bring it back to the home front. Quite frankly, what does this mean for business owners and just you know, folks trying to pay their utility bills,
Lauren Collins 29:03
Hard to say, you know. And I think there's probably folks that are looking at that very closely. Certainly, it's a slowdown of the energy transition. As we talked about, the energy needs in this country are increasing dramatically. It should be kind of a full scale press across the board on encouraging energy development and investment. This takes several steps back, so you have to imagine it will have a negative impact on consumer pricing. It'll make it more expensive to put a solar panel on your home. If that's something that you wanted to do, you no longer will get benefits for any energy efficiency type improvements that you're making on your home or business, takes away incentives for clean vehicles that you might want to use in your commercial fleet. So across the board, kind of makes things more expensive in this industry.
Alfred Johnson 29:55
I think the direct implication to people and businesses is. That costs for electricity go up and it is harder for them to make the improvements that would be necessary in order to have long term stability on cost of electricity right. Retrofits are a tremendous way of reducing long term costs associated with utility bills, and if there are no longer as strong incentives to do them, then you would expect that both the costs of electricity in the markets that consumers participate in and their needs for it would be more expensive than in the reality where the policy was maintained over a longer period of time.
Lauren Collins 30:41
And there's also grid stability too. That's important to mention, I sit in California where, you know, the grid being ready and available at all times has not always been a certainty, but seeing so many installations in recent years, we've seen a lot of improvement to the grid, and I think folks are thinking that it will be more resilient. Why we would slow that down again doesn't make a ton of sense to me.
Alfred Johnson 31:05
To build on that further, we are seeing a real surge of investment in domestic batteries, particularly in markets that have high degrees of curtailment, where there's just a lot of available energy that is not being effectively used within the grid, and that is a perfect context to develop batteries. But uncertainty is the enemy of project development, and in this world where we don't know what tax incentives are going to be, what trade policy is going to be, you find yourself in a reality where it's hard to deploy the capital that is required in order to meet a very obvious business and commercial need. So I think the sooner we can get to a place where there is more visibility into what at least near term policy will be that will help to unlock again, the commercial and market incentives that have been so strong to drive 10s of billions of dollars of investment, hundreds of billions of dollars of investment over the last few years.
Sean McMahon 32:12
And now Alfred you talked about unlocking different ways to bring investment into these projects. And I kind of want to turn the lens back to Crux right. You know, most folks know you got your start as kind of a marketplace for transferable tax credits, but you've also diversified. And so what ways are you kind of giving investors other options to participate in these markets beyond transferable tax credits?
Alfred Johnson 32:34
Yeah. So Sean, we really started with the view that there needed to be a generational investment into clean energy, manufacturing, industrial capabilities, critical minerals here in the United States, in order to be able to meet the goals of an energy transition that is increasingly apparent and something that we want to see happen. And so we started the company on the basis that the inflation Reduction Act had created this new mechanism to allow for the transfer of credits. The initial way in which Lauren and I connected was that I was out for a run and listened to this podcast that Lauren was on, calling for a market for transferable credits, which was something that I had been thinking about at the time, and shot Lauren a message on it, so that there was this moment where policy shifted the landscape around project finance created this new multi 100 billion dollar market for transferable credits. We saw the opportunity to build a deep and liquid and software centered market for those credits that additionally interested us because of the change that the credits represented to the whole capital stack, and the fact that project developers, manufacturers that were selling transferable credits had all sorts of other capital needs a single project might raise six or 10 different kinds of capital from beginning to end of it. And so the view was always to build a diversified platform that can be the place where developers and manufacturers source multiple kinds of capital, do it efficiently and do it with leading market intelligence, we have now raised about $80 million to fulfill that vision, including another 50 million that we raised in the first quarter. The debt market that we had built on top of the transferable tax credit market is accelerating really quickly. Lenders in that marketplace, which was publicly announced in March have deployed between one and $2 billion worth of term sheets, or submitted one to $2 billion worth of term sheets. We have about 700 million transactions where those term sheets have been signed, and they're in larger quantities than we anticipated. So I think the regardless of policy, again, there's still going to need to be a ton. Of infrastructure investment that happens that will require financing of all different types, and there is an opportunity to make those markets for otherwise illiquid financing more liquid, and make these transactions that Lauren can attest to are often very painful and require a lot of months and man hours somewhat less painful, using software that is built intentionally for the purpose of leading to more efficient transactions.
Sean McMahon 35:27
And now, Lauren, what are you hearing from your clients, in terms of, you know, speaking about clients who are committed to these markets, right? Are they kind of saying, Hey, how are we going to be able to funnel funds into these markets if all these changes come through? Or is everyone kind of in wait and see mode? Or, What's the most common stuff you're hearing from them?
Lauren Collins 35:43
Yeah, I think it's understandably kind of a wait and see mode. I mean, things are changing hour by hour, day by day. And again, we all fully expect that the text that we have of the proposed legislation is not by any means, the final word, so it's a little premature to start changing, you know, business perspectives, or, you know, accelerating things too much, but I think that people are starting to be prepared for the fact that there may be a sunset on certain of these credits. And if that means, you know, accelerating development, starting to think about that a bit if that means, you know, beginning construction by an outside date, starting to think about that, you know. But I keep mentioning this because it's so important that the foreign restrictions on ownership and payments to foreign entities and use of components from foreign entities, those types of restrictions are, frankly, so prohibitive that we've kind of at this point caution clients, it's not something you can currently plan around. It would be a little bit of a waste of time. We probably should wait and see, and everyone should be focused more on making sure that we are educating folks in the Senate and the House as to how these provisions would so negatively impact their project development. So that's where we have kind of encouraged our clients to focus, you know, again, happy to help anyone with that. You know, you know where to find us. It's something we're all kind of self interested in making sure it gets corrected.
Sean McMahon 37:16
So Alfred alluded earlier how he was listening to an earlier episode of this show, Lauren, when you were making a bold prediction about this thing called the transferable tax credit market. Well, obviously that prediction came true. And, you know, a few years down the road here, it's been wonderful, very vibrant market. And in other episodes on this show, you've also made predictions that, quite frankly, you have a very, very good batting average of getting them right. So I want to ask you now, Lauren, what are your bold predictions for how some of this whole thing might shake out?
Lauren Collins 37:47
Yeah, I'll try to be a little bit more positive than I've been over the course of this conversation. I mean, I think my overall bold prediction is that some of the advocacy that's taking place, some of the education that is taking place in DC will be successful. Cooler heads will prevail, and we will see an ultimate bill that comes out of the Senate that is more workable and more favorable to the energy transition and really kind of supports some of the policy positions that are held on both sides of the aisle. And and again, I think that mainly is around restrictions, around foreign ownership control and using foreign components in projects and facilities that would otherwise be eligible for the credit so that that's my, my bold, optimistic prediction for the bill as a whole. Another more nuanced area is again, with the clean fuel PTC I'm hearing, and I suspect there'll be some additional improvements to that credit, and we'll continue to see the RNG industry really kind of blossom with those credits being available. And we'll start to see those start to be traded more on the transferability market, as folks are getting comfortable with the clean fuel. PTC, so that's kind of one bright spot in all of the legislation thus far.
Sean McMahon 39:07
Alfred, now it's your turn. Any bold predictions for what lies ahead?
Alfred Johnson 39:11
Yeah. Sean, I think that if you pull up to 30,000 feet, we are in the midst of one of the largest economic transitions that the world has ever seen. Right? We lived through a period after World War Two, and certainly since the end of the Cold War, where things were very predictable in terms of the global and economic order, I think we are now in a world where things are changing very rapidly, and there's a retrenchment to domestic energy industrial and manufacturing policy in various forms, and I think that that is going to lead to a huge amount of infrastructure. Structure that ends up being built and built differently than it would have had we been in the prior market reality. And I think irrespective of these policy factors, where I do think that cooler heads will prevail and we will come out of the other side with policy that is generally supportive, I think that we are going to continue on a significant trajectory of change, and that energy markets, our economies, the way that we think about international trade, will all be substantially different 10 years from now than they are today, and we're just at the beginning of that change. I also to that, to build on that further. Sean, I think that there are aspects to this legislation that we have not really considered at all, given the amount of things that are on the table here, things like accelerated depreciation and the creation of new qualified opportunity zones for rural areas that could also have implications on the clean energy industry, and because of the gravity of some of the things that we are considering outside of those changes, the market has not yet processed, what the implication may be of some of those other changes that are In this sweeping legislation that is currently being considered.
Sean McMahon 41:23
Alrighty, well, hey, listen, I appreciate insights from both of you and to our listeners. You know, if you want to hear more from either Crux or Vincent and Elkins, both those organizations have put out their analysis of what's currently in the reconciliation bill, and we're including links to those in the show notes. But for right now. Lauren and Alfred, thank you so much for your time today.
Alfred Johnson 41:42
Thanks for having us.
Lauren Collins 41:45
Thank you. Have a good one
Sean McMahon 41:52
that's our show for today. But before we get out of here, I want to say one final thank you to the exclusive sponsor of today's episode, KPMG, thank you all for listening, and if you haven't already, please subscribe or follow this show on Apple, Spotify, Google or wherever you listen to your podcasts, and as always, please be sure to share it with your friends and colleagues. Have a great day.