Small cap companies operating across a range of industries in the United States have welcomed the recent passage of the Inflation Reduction Act of 2022 (IRA).
The sweeping $750 billion bill, which aims to curb inflation by investing in domestic energy production while promoting clean energy, reducing the deficit, and lowering prescription drug prices, was signed into law by US president Joe Biden on August 16.
The bill includes a $369 billion investment over the next 10 years in climate programs set to directly benefit small cap companies working across the energy sector.
READ: Westwater Resources applauds historic Inflation Reduction Act
One such company is battery-grade natural graphite development company Westwater Resources Inc (NYSE-A:WWR) which will benefit from the bill's Advanced Manufacturing Tax Credit – a 10% tax credit for the costs of producing certain critical minerals in the US.
Westwater executive chairman Terence Cryan said the company would be able to leverage this tax credit for the future production of advanced anode material from its Kellyton graphite processing plant located in Alabama.
"In addition, the legislation should increase demand for domestically produced graphite and vanadium, both of which are contained in our Coosa graphite deposit - the IRA is good news for Westwater," he said.
NioCorp Developments Ltd noted that the tax credit included the critical minerals niobium, scandium, and titanium which are the resources the company intends to produce at its Elk Creek project in Nebraska, making it eligible for the tax credits once the project is financed and placed into commercial production.
"President Biden and Congressional leaders deserve credit for 'walking the talk' in this legislation on the need to make more of our own critical minerals in the US, and to reduce our reliance on foreign nations that hold the key to our nation's success in transitioning to a less carbon-intensive economy," said NioCorp CEO Mark Smith.
READ: American Resources applauds Inflation Reduction Act's support for domestic critical mineral production
Supplier of rare earth and critical elements American Resources Corporation (NASDAQ:AREC) also applauded the bill’s support for a more resilient domestic supply chain for critical minerals.
American Resources CEO Mark Jensen commented: "While the critical mineral requirements within the bill credits are aggressive and stringent, we are confident our ReElement Technologies division is in a leading position to simultaneously help recipients achieve certain standards and support the buildout of our own critical and rare earth mineral processing facilities."
Solar and electric vehicle incentives
As part of its $369 billion clean energy allocation, the IRA provides incentives for residential and commercial consumers to pursue energy-efficient options, such as tax credits for solar panels, electric vehicle (EV) charging stations, and green energy storage.
Renewable energy and sustainable solutions provider SinglePoint Inc said the bill would provide tax incentives and direct pay opportunities for its newly acquired subsidiary Boston Solar, which the company’s CEO Wil Ralston said is well positioned to benefit from consumers looking for solar energy, energy storage, and EV options.
“Homeowners, businesses, and schools will have financial incentives to pursue efficient structural improvements to their properties and municipalities, with the potential to produce cleaner air, cleaner energy, and a better climate,” SinglePoint said.
READ: American Manganese says US Inflation Reduction Act of 2022 recognizes critical role battery materials play
Lithium-ion battery recycling and upcycling company American Manganese Inc, doing business as RecycLiCo Battery Materials, highlighted the Act’s restoration of tax credits for EVs with restrictions based on where the batteries are built and where the critical minerals are mined, recycled or processed.
Member of the company’s advisory board Dan McGroarty observed that this change came less than four months after the country designed major battery materials, including those RecycLiCo will extract from spent batteries, as essential materials under Title III of the Defense Production Act of 1950.
"I see this as a strong signal that US policymakers are coming to understand that the ‘battery criticals' are true dual-use materials, required for the national economy as well as national security,” he said.
Expansion opportunities for hydrogen industry
For PowerTap Hydrogen Capital Corp, the act provides incentives for the company to expand its hydrogen operations from California into other parts of the United States due to the fact that needed attractive incentives to build hydrogen infrastructure have become available at a federal level.
“We are also pleased that this legislation is awarding federal incentives including tax credits to both green and blue hydrogen producers in the United States,” noted PowerTap CEO Raghu Kilambi.
Per a detailed analysis provided to the company by business intelligence source for renewable energy industries Recharge, PowerTap said the bill would create a tax credit that would pay it and other clean hydrogen producers up to $3 per kilogram, adjusted for inflation.
Contact the author at emily.jarvie@proactiveinvestors.com
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