An analysis by Goldman Sachs suggests the IRA will channel as much as $3.3 trillion into renewable technologies and other areas over the coming decade, almost 10 times the amount initially indicated by the Biden administration. Some investments have been slowed down, however, by delays in guidance from the US Treasury on how best to tap into the bill.
“There have been a lot of questions on when the IRA is going to be a real driver of earnings and earnings tailwinds” not just for the renewable sector, but also for companies further down the supply chain, Singer said. “It is our view that we are going to see a pickup in terms of earnings tailwinds as we move towards the end of this year and into 2024.”
Overall, clean-tech stocks have outperformed the broader market this year, with the MSCI ACWI IMI Renewables & Energy Efficiency Index up 18%, compared with a 13% gain in the MSCI ACWI Index. Funds registered as incorporating environmental, social and governance goals, meanwhile, have returned 12% on average this year, compared with an 18% gain in the S&P 500 Index, according to data compiled by Bloomberg.
A review by Singer and the team of analysts with whom he works at Goldman found that solar energy, battery storage and hydrogen remain underpriced. But their analysis shows that by the end of this year and into 2024, earnings reports for companies in battery storage, solar and electricity transmissions as well as carbon capture and blue hydrogen will start to reflect the beneficial impact of the IRA.
The trillions of dollars that Goldman’s analysis indicates will be unleashed by the IRA “will be a bit more back-end loaded,” Singer said. “But that doesn’t mean we won’t see those investment tailwinds start to show up as we get into 2024.”
So, if this is an investing opportunity, how does one invest in the MSCI ACWI IMI Renewables & Energy Efficiency Index?
Investment in these renewable technologies has to be viewed from perspectives other than "money, money, money." We're watching the planet burn at an incredibly fast rate, faster than ever anticipated. The cost of having to constantly fix the damage (how much will it cost for Maui alone?) has to be factored in.
The money allocated in the IRA to help the IRA chase down high net worth tax cheats has paid huge dividends so far.
Those ESG funds remain mostly a joke. Invest wisely, and if you're passionate about things, share some of your gains with the organizations that make a difference.
I am not actually looking specifically for a ESG fund, but one that follows the MSCI ACWI IMI Renewables & Energy Efficiency Index. I would think given the number of ETF's out there someone would have one that follows that index, so far I can't find one.
