At Nasdaq ESG Solutions, we continuously seek innovative approaches to assist our clients in achieving their sustainability objectives while discovering new avenues for value creation. Our partnership with Crux, a technology firm specializing in sustainable finance, aims to enable clients to leverage transferable tax credit transactions available through the Inflation Reduction Act (IRA).
What is the Inflation Reduction Act of 2022 (IRA), and how does it benefit corporations?
The IRA provides funding, programs, and incentives to expedite the implementation of clean energy projects—such as solar, geothermal, wind, energy storage, and microgrids—and enhance climate resilience as part of the transition to a clean energy economy. A notable feature of the law is its transferability provision, which allows clean energy developers and manufacturers to sell their tax credits to third parties for cash, a first in this sector.
This new market mechanism broadens capital access for corporations involved in developing eligible clean energy infrastructure, innovative technologies, and advanced manufacturing, while also lowering federal tax liabilities for companies purchasing these credits.
Why is this significant?
The ability to transfer tax credits presents an opportunity for businesses across various sectors and sizes to support the energy transition while achieving positive returns on investment. For instance, companies with federal tax obligations can utilize transferable tax credits to decrease their tax bills, freeing up resources that can be redirected toward enhancing sustainability initiatives or launching new projects. Furthermore, firms producing renewable energy or eligible advanced manufacturing goods may find more flexible financing options available to them, promoting broader market participation and expediting the adoption of clean technologies.
How can Nasdaq ESG Solutions and Crux assist corporations in navigating this emerging market?
The Nasdaq ESG Solutions team is dedicated to generating significant positive impacts across corporations, investors, and financial institutions, as well as their employees, customers, and suppliers. Our deep engagement with both corporate and investment sectors uniquely equips us to support clients in their sustainability journeys.
Established in January 2023, Crux aims to transform the financing landscape for clean energy and decarbonization projects in the U.S., beginning with transactions involving transferable clean energy tax credits. Through our collaboration, clients of Nasdaq ESG Solutions can benefit from cost savings and progress toward their sustainability goals by accessing Crux’s platform, which hosts the largest network of clean energy project developers and manufacturers. Additionally, our clients will gain insights from Crux regarding the fast-evolving market for transferable tax credits.
In July, Crux published its 2024 Mid-Year Market Intelligence Report, which analyzed data from $6.8 billion in tax credit transfers and revealed several trends:
Robust market expansion: The market for transferable tax credits continues to grow swiftly and is projected to reach $20-25 billion by the end of the year, more than doubling the size of 2023. Clear pricing trends: Average pricing for 2024 is trending upwards compared to 2023, driven by transaction sizes and the use of insurance. Increasing buyer interest in future commitments: Buyers of transferable tax credits are beginning to explore opportunities for 2025. Notably, 25% of the reported deals for 2024 included a forward component with tax credits for future years. What is the Inflation Reduction Act of 2022 (IRA), and how does it benefit corporations?
The IRA provides funding, programs, and incentives to expedite the implementation of clean energy projects—such as solar, geothermal, wind, energy storage, and microgrids—and enhance climate resilience as part of the transition to a clean energy economy. A notable feature of the law is its transferability provision, which allows clean energy developers and manufacturers to sell their tax credits to third parties for cash, a first in this sector.
This new market mechanism broadens capital access for corporations involved in developing eligible clean energy infrastructure, innovative technologies, and advanced manufacturing, while also lowering federal tax liabilities for companies purchasing these credits.
Why is this significant?
The ability to transfer tax credits presents an opportunity for businesses across various sectors and sizes to support the energy transition while achieving positive returns on investment. For instance, companies with federal tax obligations can utilize transferable tax credits to decrease their tax bills, freeing up resources that can be redirected toward enhancing sustainability initiatives or launching new projects. Furthermore, firms producing renewable energy or eligible advanced manufacturing goods may find more flexible financing options available to them, promoting broader market participation and expediting the adoption of clean technologies.
How can Nasdaq ESG Solutions and Crux assist corporations in navigating this emerging market?
The Nasdaq ESG Solutions team is dedicated to generating significant positive impacts across corporations, investors, and financial institutions, as well as their employees, customers, and suppliers. Our deep engagement with both corporate and investment sectors uniquely equips us to support clients in their sustainability journeys.
Established in January 2023, Crux aims to transform the financing landscape for clean energy and decarbonization projects in the U.S., beginning with transactions involving transferable clean energy tax credits. Through our collaboration, clients of Nasdaq ESG Solutions can benefit from cost savings and progress toward their sustainability goals by accessing Crux’s platform, which hosts the largest network of clean energy project developers and manufacturers. Additionally, our clients will gain insights from Crux regarding the fast-evolving market for transferable tax credits.
In July, Crux published its 2024 Mid-Year Market Intelligence Report, which analyzed data from $6.8 billion in tax credit transfers and revealed several trends:
Crux’s report highlights the extensive market accessibility now available to companies with diverse federal tax profiles and varying levels of experience with tax credit purchases. With over $12 billion in credits currently available, Crux and Nasdaq ESG Solutions are well-equipped to assist clients and their legal and tax advisors who are new to the market in exploring how transferable tax credits can enhance sustainability strategies and reduce federal tax burdens.
Our collaboration with Crux is driven by their operation of the industry’s central platform, positioning them to significantly enhance the liquidity, transparency, and efficiency of the transferable tax credit market. Their combination of market intelligence, platform capabilities, a wide-reaching network, and an experienced team—coupled with the strategic insights from Nasdaq ESG Advisory—can help clients eager to fast-track their sustainability objectives and create a positive environmental impact.
Click here if you want to know more information on leveraging transferable tax credits to support sustainability goals.