Legislation Within the Biden Green New Deal, Inflation Reduction Act, Has Created a Domestic Carbon Trading Platform – Investment Watch

by Sundance

Inside the legislative language of the “Inflation Reduction Act,” also known as the Green New Deal legislative vehicle, constructed by lobbyists and passed by Congress, people are now beginning to realize a carbon trading system.

Ultimately, a carbon trading system has always been the holy grail of the people who run the Western financial system and want to create mechanisms to control wealth through the “climate change” agenda.

A carbon trading system is a highly lucrative financial transfer mechanism with a potential scale to dwarf the derivatives market, Wall Street’s bets. Secondly, this market would consolidate the energy policy of climate change making it very difficult to reverse it. The new creation, according to the Wall Street Journal, has similarities with the EPA’s ethanol program.

BACKGROUND: The Renewable Fuel Standard (RFS) is a government mandate, passed in 2005 and expanded in 2007, that requires increasing volumes of biofuels to be blended into US transportation fuels such as gasoline and diesel each year. About 40 percent of the corn grown in the US is used for ethanol. The increase in the amount of ethanol needed in gasoline will lead to the need for more biofuel (corn).

The EPA enforces the biofuel standard by requiring refineries to submit purchase credits (known as Renewable Identification Numbers, or RINs) to the Environmental Protection Agency (EPA) that demonstrate the purchases. This enforcement requirement establishes a system where RIN credits are bought and sold by small refineries that do not have the infrastructure to do the blending process. They buy second-hand RIN credits from parties that blended or imported biofuels directly. This creates a secondary revenue stream, a trading market for major oil companies, refineries and importers.

Understanding how this system works, in June I said: “RIN’s credit trading platform is similar to what we could expect to see if the ‘carbon trading’ scheme was put in place.”. Well, under the Inflation Reduction Act/Green New Deal legislation, that’s exactly what’s happening.

(Via Wall Street Journal) – WASHINGTON: A whole new market for green tax credits is taking shape as bankers and advisers figure out how to channel tax breaks from the energy companies that generate them to profitable corporations eager for smaller tax bills .

The market is shaping up because last month Congress expanded tax credits for renewable energy and made them transferable in legislation known as the Inflation Reduction Act.

[…] The sales of tax credits mark a shift in the US strategy for attracting public and private capital to renewable energy projects, and will occur alongside existing climate finance markets such as carbon offset purchases. The deals won’t begin in earnest until 2023, but lawyers and financiers are already structuring deals. They are discussing arrangements in which the credits would be sold at discounts to face value and determining how to cushion buyers of tax credits against potential risks.

“The talks are happening. Market making is happening right now,” said Nicholas Knapp, senior managing director at CohnReznick Capital in New York.

In a year or two, it could be easy for a corporation with no direct investment in renewable energy—a profitable retailer, a pharmaceutical manufacturer, or a high-tech company—to buy tax credits. Because of the expected discounts, businesses could make an instant profit, paying $90 or $95 for a $100 coupon from their income tax liability.

These transferable credits, however, present a potential dilemma for Democrats. The party aimed to increase the corporation tax bill and prevent large profitable companies from paying too little. But tax credit transfers open a new avenue for many of these same businesses to pay less.

“They can essentially buy the tax credits, advance their ESG goals and get certain economics from the credits without taking any construction or operational risk on the project,” said Hagai Zaifman, a partner at Sidley Austin LLP in New York who helps structure the renewable energy offers. (Read more)

We know exactly who we have to thank for that, West Virginia Senator Joe Manchin.

Now look at what Senator Joe Manchin’s family is starting to do.

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