Transformational Change Afoot with the Passing of the Largest Clean Energy Bill in U.S. History

Yesterday, President Biden signed the Inflation Reduction Act of 2022 (IRA), which will not only reduce carbon emissions by approximately 40% by 2030, but will also dramatically change our country’s approach to clean energy and, in particular, how buildings in the United States are designed and powered.

As the largest contributors to carbon emissions in the U.S., commercial buildings play an important role in combatting climate change – and the transformation of the built environment presents an exciting investment opportunity for our country.

Lower Energy Costs, a More Sustainable Country, and a Healthier Economy

The IRA contains provisions that would benefit commercial property owners by incentivizing them to make their properties more energy efficient. The new bill will, among many things, expand tax deductions to encourage the use of energy efficient equipment in buildings and push states to put forward building codes that will motivate developers to incorporate sustainable design into new construction. In addition, there are game-changing provisions for solar deployment in the bill that will increase and extend tax credits for clean energy – with additional incentives for U.S. manufacturing.

What does this mean for Commercial Real Estate and C-PACE (Commercial Property Assessed Clean Energy) Financing?

Because the bill puts billions of dollars in tax credits toward clean energy manufacturing and tax credits for solar and battery storage, CRE developers are in a position to realize millions of dollars in savings annually, while taking measures to benefit the environment.

In conjunction with C-PACE’s low-cost, long-term, fixed-rate capital, this bill will further incentivize more developers to explore this financing tool and employ renewable and energy efficiency measures into their projects.

C-PACE has been around for several years as a financing mechanism to allow building owners to reduce the operating expense of their properties. The market signals sent by the IRA will further encourage building owners to seek ways to reduce energy consumption in their real estate portfolios and enjoy significant tax benefits.

“The CRE owners who have utilized C-PACE have seen that it is a win-win proposition that offers low-cost, long-term, fixed-rate financing within their capital stack,” said Jessica Bailey, Nuveen Green Capital President and CEO. “This bill is a historic step forward in the United States’ efforts to address climate change; and I expect it to generate more demand for smart CRE financing solutions like C-PACE. We are excited to be a part of this transformation of the built environment.”

Want to learn more about C-PACE financing and get started with Nuveen Green Capital?

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