Why Clean Energy Investors Cheered Biden’s Inflation Reduction Act

A Historic Win for Clean Energy Development

U.S. President Joe Biden passed historic legislation last month with the signing of the Inflation Reduction Act (“the IRA”).  The law spells out the most aggressive climate action in U.S. history and outlines specific directives to support the building of a clean energy economy by 2030. It will:

  • Generate more clean power for homes, businesses and communities through the construction of:
    • 950 million solar panels,
    • 120,000 wind turbines and
    • 2,300 grid-scale battery plants.
  • Advance cost-saving clean energy projects at rural electric cooperatives that serve 42 million people.
  • Strengthen climate resilience and protect nearly two million acres of national forests.
  • Create millions of good-paying jobs within the U.S. clean energy industry.
  • Reduce greenhouse gas emissions by roughly one gigaton—or a billion metric tons—resulting in 10 times more climate impact than any other piece of legislation ever enacted.
  • Prevent up to 3,900 premature deaths and 100,000 asthma attacks annually by simultaneously increasing clean energy output and reducing particle pollution from fossil fuels.[i]

Many of the existing clean energy incentives in Europe are more ambitious than those in the IRA.[ii] However, the new directives are expected to bolster not only U.S., but global, progress toward clean energy targets. This is due to the outsized role of the U.S. economy in the global market, as well as the resulting effects on global clean energy companies.[iii] Moving forward, we hope to see all governments around the world continue to increase their investments in clean energy and commit to a greener economy where the benefits are widely shared throughout society.

The need to ease global warming is a global mega-trend that’s already underway. But lately, the global energy crisis and focus on energy security have added a sense of urgency to accelerate the transition, reaching far beyond Europe. In addition, while production costs for clean energy (particularly solar and wind) have recently increased, they are not rising nearly as quickly as fossil fuel costs. This further improves the competitiveness of the clean energy industry.[iv] All told, the current mix of macro- and microeconomic factors strongly support clean energy as an attractive investment opportunity.


BMO Funds with significant investments in clean energy companies:

BMO Clean Energy Index ETF (ZCLN) | BMO Clean Energy ETF Fund

BMO Brookfield Global Renewables Infrastructure Fund ETF Series (GRNI)


[i] Source: https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/15/by-the-numbers-the-inflation-reduction-act/

[ii] Source: https://www.bnnbloomberg.ca/who-s-winning-on-consumer-climate-incentives-the-us-or-europe-1.1814179

[iii] Source: https://www.americanprogress.org/article/how-the-inflation-reduction-act-will-drive-global-climate-action/

[iv] Source: https://www.iea.org/reports/renewable-energy-market-update-may-2022


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Danna Broadworth

Responsible Investment Client Strategy Manager, BMO GAM

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