Francesco Conte, portfolio manager, JPM Climate Change Solutions Fund
The IRA will lead to opportunities across a broad range of climate change solutions. We’re focused on three key areas.
First, the IRA aims to accelerate the transition to clean energy while also re-shoring renewable technologies. This directly benefits clean energy providers, and we have investments in companies providing solutions such as heat pumps and batteries.
Second, producers of electrification equipment will benefit not only directly via incentives, but also indirectly from the additional need for electrification infrastructure given the push towards renewables and energy efficiency.
The third focus is new technology. According to data published by the International Energy Agency in October 2022, producing green hydrogen using renewable energy costs between $3 and $8 per kg, compared with only $0.5–$1.7 per kg when using natural gas. Through the IRA, clean hydrogen plants can receive a tax credit of up to $3 per kg, encouraging more investment, which can hopefully reduce future costs.
Our investments in new technologies are currently modest but could become more meaningful if subsidies for areas such as carbon capture and hydrogen materialise.