Article Summary –
The US election in November may put Inflation Reduction Act programs and regulations at risk, according to KKR & Co.’s global head of infrastructure, Raj Agrawal. However, he also states that it’s unlikely that the IRA will be fully repealed and adds that discretionary spending programs depend on the adminstration of the White House. Despite uncertainty regarding public funding and subsidies, Agrawal asserts that “investment in renewables is a structural trend that is not going away.”
US Election Outcome Might Impact Inflation Reduction Act
The forthcoming US election might put the Inflation Reduction Act (IRA) and its related programs at risk, says Raj Agrawal, Global Head of Infrastructure at KKR & Co.
Agrawal notes that clients question the possibility of an electoral outcome leading to the repeal of the IRA. This Act is responsible for the provision of hundreds of billions of dollars in funding and tax benefits for clean energy initiatives.
Agrawal believes that a full repeal of the IRA is unlikely, but changes in the discretionary spending programs and potential IRA tax-code revisions could occur, depending on who takes residence in the White House.
Regardless of public funding and subsidies uncertainty, Agrawal anticipates the trend of investing in renewables to continue due to the persistent demand for clean energy. He mentions, “Renewable energy capacity has exhibited consistent growth over the past 22 years and the International Energy Agency anticipates a greater rise in global capacity in the next five years than in the previous century since the inaugural renewable energy power plant.”
Agrawal also highlighted the constant consolidation activities and the emergence or growth of businesses managed by competitors, validating infrastructure as an asset class. The interest in the sector was significantly heightened earlier this year following BlackRock Inc.’s agreement to acquire Global Infrastructure Partners for about $12.5 billion.
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