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Key Takeaways | Hospitals and Renewable Energy: New Financial Incentives and Opportunities in the Inflation Reduction Act

During this webinar, Heather Cooper and Carl Fleming, partners in the McDermott’s energy & project finance group, teamed up with McDermott+Consulting’s Debra Curtis to break down the key opportunities and actionable steps that your in-house team stakeholders need to know about to take advantage of what the Inflation Reduction Act of 2022 (IRA) has to offer. Discussion topics included a highlight of important provisions in the IRA and the incentives they hold for hospitals, an update on how the Biden administration is approaching climate change and healthcare, how to track funding sources and apply for tax credits and deductions and more.

Below are key takeaways from the discussion:

1. Hospitals, Healthcare and Climate Change. Hospitals and the healthcare sector both have a role to play in climate change mitigation. The healthcare sector accounts for about 8.5% of all greenhouse gas emissions in the United States and about 4.5% of emissions worldwide. These emissions are generated mostly from running energy-draining facilities 24/7. Hospitals have an opportunity to not only track and report emissions, but also to reduce them.

2. Hospitals and Healthcare Systems Now Face Climate Change Operational Risk. While there may have been a lack of oversight and accountability on hospitals and the healthcare sector in regard to climate change, there are now several forces pushing hospitals—and the healthcare system more broadly—to undertake efforts to reduce their dependence on fossil fuels.

3. Health Sector Climate Pledge. On June 30, 2022, US President Joe Biden announced the “Health Sector Climate Pledge.” As a result, the US Department of Health and Human Services (HHS), in partnership with the White House, is mobilizing the healthcare sector to reduce emissions. Under the Pledge, 61 of the largest US hospital and health sector companies (which account for about 650 hospitals) committed to reducing greenhouse gas emissions by 50% by 2030. Additionally, in response to the Biden administration’s directive to federal agencies on climate change, the HHS has taken several other steps to address the issue. Internally, it has created small offices to examine climate change, health equity and environmental justice.

4. The IRA Is Historic. Perhaps the biggest incentive for hospitals to take action comes from the IRA, which President Biden signed into law back in August. The IRA is the largest climate change legislation ever enacted globally and provides for $369 billion in climate change programs and incentives with a 10-year timeframe (versus the prior one-to-three-year increments). It also greatly expands tax credits for US companies that adopt energy-saving renewable technologies and, for the first time, makes these credits available to nonprofits—a category that includes just over half of the nation’s hospitals.

5. The IRA Unlocks Opportunities for Hospitals. Under the IRA, hospitals now (1) have access to a new significant financial incentive for energy efficiency, (2) gain access to the previously restricted tax equity market via transferability [...]

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Key Takeaways | Legislative Update on Renewable Energy Tax Incentives

On November 17, McDermott Partners Philip Tingle and Heather Cooper were joined by Bill Parsons, COO of the American Council on Renewable Energy (ACORE), for a discussion on recent legislative activity regarding renewable energy tax incentives and how it will affect current tax credits as well as those in the center of the renewables space.

Below are key takeaways from the webinar:

1. Negotiations surrounding the Build Back Better Act and progress regarding the substance of the bill have been moving at a rapid pace. Despite some uncertainties, the hope is that something will be passed before year-end—and the tax credits component is likely to look very similar to the current proposal.

2. A shift in thinking has taken place in US Congress, specifically, the clean energy tax regime is now seen as a credible driver in achieving the Biden administration’s decarbonization and climate goals.

3. Industry participants are assessing whether the direct pay component of the Build Back Better Act will dramatically change the tax equity market. Several factors will determine how direct pay will affect said market, including the timing of payments, Internal Revenue Service (IRS) scrutiny, availability of depreciation and tax basis step-ups, permissiveness of waivers, congressional oversight and the proposed minimum book tax.

To access past webinars in this series and to begin receiving Energy updates, including invitations to the webinar series, please click here.




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