Motivating CFOs to Prioritize Climate Change
TL/DR –
Schneider Electric is partnering with Engie to develop four clean energy projects in Texas, financed via the Inflation Reduction Act (IRA)’s tax incentives. Schneider will pay Engie $80m in exchange for access to the projects’ tax credits, which it will use to purchase more renewable energy credits. The IRA’s provisions broaden the pool of companies that can engage in such transactions, creating a new marketplace that boosts renewable energy while providing financial benefits.
Engaging Executives in Climate Change Initiatives
In order to engage sustainability executives and other divisions in large corporations, executives need to understand the benefits of addressing climate change and emissions reduction. Although it isn’t usually part of their job description, knowledge about climate change is crucial.
Schneider Electric’s Climate Solution
This week, Schneider Electric, the French energy management multinational, proposes a climate solution aimed at CFOs and finance departments. They offer a novel way to leverage new tax incentives in the U.S. Inflation Reduction Act (IRA).
Collaboration for Clean Energy
Schneider Electric has teamed up with Engie, a French utility company, to develop four clean energy projects in Texas. Schneider agreed to pay Engie $80 million to gain access to the project’s tax credits. Schneider will use its tax savings to purchase further renewable energy credits.
Creating New Opportunities
A key feature of the IRA allows clean energy developers to sell their tax incentives to companies without an ownership stake in the project. This is significant because many renewable energy builders don’t have a large enough tax burden to fully utilize federal incentives. Schneider’s North America CFO, Joshua Dickinson, describes this as a new marketplace enabled by the IRA.
Engie Deal as a Case Study
Schneider hopes this deal will pique interest for CFOs focused on the bottom line. The IRA’s provisions, which the Treasury Department issued guidance on last June, potentially broaden the pool of corporate participants. Schneider plans to use its Engie deal as a case study to facilitate similar arrangements and connect companies with projects.
Adapting to Change
The Engie deal serves as a reminder of the importance of adapting corporate perception of climate change. It illustrates the variety of new opportunities created by the IRA for companies to promote decarbonization while being profitable—though some may require innovative thinking.
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