How Wall Street Banks Will Reap Billions From Tax-Free Renewable Energy Bon
Getting Wall Street banks to pay more attention to renewable energy has been an uphill battle. The lion’s share of the $60 billion in investments since the 1990s has gone into fossil fuel. Yet the government has managed to come up with a few tricks to get companies to invest in the clean energy industry. These include subsidies and tax incentives. However, the real payoff comes in the form of cheaper financing. For example, there have been a number of ultra-green electric power agencies who have raised money through tax-free municipal bonds.
How Wall Street Banks Will Reap Billions From Tax-Free Renewable Energy Bon
One such scheme is the Clean Energy Project Revenue Bond (CEPRB) deal. This is a repackaged version of the muni-bond, with a larger amount of green power thrown into the mix. Each CPRB deal features a 4% coupon rate, and is marketed as a vehicle for local utilities to buy a certain amount of renewable electricity for the next 30 years. Some of the major players in this market include Citigroup, Goldman Sachs, and Thornburg Investment Management.
In fact, these guys have been raising money this way for a while. According to the CCCFA, the Clean Energy Project Revenue Bond has already raised more than $2.7 billion. While it’s not clear exactly how much of the money has gone into actual investments, these companies do make a good bit of money from the prepaid muni-bond industry. They’ve also been responsible for some of the biggest green-energy deals to date.
How Wall Street Banks Will Reap Billions From Tax-Free Renewable Energy Bon
Aside from the obvious tax credits, the federal Inflation Reduction Act of 2012 included an impressive $270 billion in new incentives for both natural gas and renewable energy. This isn’t all; the act also expanded the list of eligible products to include geothermal, solar, and wind. But while these are great incentives, they’re not terribly effective in the real world. Ultimately, there are two things to be gleaned from this bill: the tax-free muni-bond craze is still very much alive, and it’s likely that the next wave of nascent technologies will be more efficient.
How Wall Street Banks Will Reap Billions From Tax-Free Renewable Energy Bon
The fact that Wall Street bankers are demonstrating their proficiency in the clean energy field is no doubt a big boon to the industry. Despite the many naysayers, they are on track to make green energy their business. With more than 850 projects under their belts, they’ve learned how to run a successful renewable energy operation. Their latest venture, MN8 Energy, is planning a stock offering in the spring. Combined with other ventures, this could be the beginning of a new golden age for the energy industry.
Ultimately, the big question is how will these giants of the finance world respond to these changes? How will they monetize their expertise? And will the influx of federal incentives spur them to go green?