Infra Berlin in brief: IRA today, gone tomorrow?

Discussions on renewable assets turned political on Tuesday afternoon at the Infrastructure Investor Network Berlin Global Summit, particularly in regard to the potential for an unravelling of the Inflation Reduction Act.

“’Congress giveth and the IRS taketh away’ will probably sum that up best, which has always been the case on tax things because the US seems to be beholden to using the tax code for effective fiscal policy,” prophesised Scott Mackin, a partner at Denham Capital. He didn’t view the IRA through a rosy lens, though, as “unfortunately, things like the IRA have kept afloat developers who should have died a while back”.

Arclight partner Carter Ward agreed. “I would say the stability of tax credits in the US is an illusion. And if people think the IRA was going to be in place the way it is forever, they’re probably not a good student of history.”

Still, the IRA goodies are not evenly distributed, and this may yet save the day. “In the US, 90 percent of those dollars are going into red states… So I think that’ll be very difficult to get rid of,” said Mackin.

Rutuja Jagtap, investment director at Finance in Motion, summed it up nicely: “Policy cannot be your base case. I think policy is an enabler. Economic fundamentals have to be your underwriting criteria.”