As originally published in the Jackson Hole News and Guide on April 19, 2023
By Nathan Wendt, President, Jackson Hole Center for Global Affairs, and Rusty Bell, Director of the Office of Economic Transformation in Gillette and former Campbell County commissioner.
Teton County is the wealthiest county in the U.S. with an average per capita income of more than $300,000 — $100,000 more per capita than the second wealthiest county in the nation. A disproportionate amount of that wealth was made in the investment markets — venture capital, private equity and more. For Jackson Hole investors looking for the next big thing, there’s no need to look beyond state lines. This is because there may be no better way to make money over the next decade than by investing in and providing matching funds to land Inflation Reduction Act-supported clean energy projects in Wyoming.
As the Fed fights inflation and with interest rates raised substantially, it’s unlikely that the cheap money days that fueled the stock market and corporate profits over the past decade will return anytime soon, if ever. Now with Congress' passage of the Inflation Reduction Act in 2022, this decade’s great money-making opportunity will be in investing in net zero projects in energy communities including in Wyoming. The flush tax credits and incentives opened up by the IRA can be deployed to make serious returns - as much as 70% of a new project’s cost can be covered in some instances
Progress is already underway. Project Bison, to be located near Rock Springs, will become the world’s largest direct air capture project - capturing CO2 from the atmosphere and permanently storing it underground. TerraPower, the next generation nuclear project at a retiring coal plant in Kemmerer, will deliver carbon-free, baseload power to the grid when done.
By passing the IRA, the Biden Administration has turbocharged the opportunity to build a new clean energy economy, built and powered by American workers, with a specific opportunity to invest in Wyoming’ s energy community workers, and Wyoming projects. Some of the tax credits outlined in the Inflation Reduction Act Guidebook for solar projects, wind projects, and carbon capture include 30%, 30%, and $85/ton of stored CO2, respectively. On April 4th, the Interagency Working Group on Coal and Power Plant Communities and Economic Revitalization held a progress report on their efforts to support energy communities thus far – including the 22 different incentives and over $500 billion in federal funding that is relevant and accessible. Among other credits, there is now an additional 10% kicker on-top of those credits, for projects located in energy communities. A new online tool maps which energy communities are eligible for the various credits. An additional $450 million was announced for clean energy demonstration projects on current and former mine lands.
Wyoming has long been a national leader in producing energy and possesses experienced energy workers and energy infrastructure rarely found elsewhere. What better place for a Teton County investor hunting for the next opportunity to invest in than coal country - Campbell County? Campbell County’s coal revenues have long provided Wyoming our revenue for schools, roads, and state-workers – basically paying the bills in lieu of no income or corporate taxes. Now, the IRA opens up a new generation of opportunity in Campbell County, beyond just coal.
For example, take carbon capture projects. The IPCC has said that in order for the globe to meet climate goals, carbon capture will need to be deployed widely. Campbell County could be a leader in carbon removal - with the workers, experience, and the industrial sites already in existence – many sitting idle and ripe for re-use. The Nature Conservancy’s Coal Infrastructure Reuse Report Study, outlines this state-wide opportunity. The incentives of the IRA create the profitable pathway forward. For example a carbon capture project would qualify for the 45Q tax credit ($85/ton of stored C02). A project that retrofit existing facilities in Campbell County could qualify for the Advanced Energy Manufacturing and Recycling Grants program providing millions of dollars in grants. And then add to that the 10% energy communities tax credit kicker.
Here's a back of the envelope, very rough and basic example of what a theoretical IRA-tied project could look like: A carbon capture project to be launched in Campbell County will capture and store 1 million metric tons of CO2 per year and costs $600 million to build. The project qualifies for 45Q, the energy communities tax credit and gets a $25 million grant from DOE for retrofitting on old coal-fired power plant. The 45Q tax credit applies to the first 12 years of operation equaling $85/ton x 1 million tons/year x 12 years = $1.02 billion. The project would also receive the 10% additional energy communities tax credit = 10% x $600 million = $60 million. Over 20 years, the incentives would be around $1.105 billion via $1.02 billion (45Q tax credit) + $25 million (DOE grant) + $60 million (energy communities tax credit).
The IRA has catalyzed the opportunities, but there remains a need for sensible policy reforms that allow the transformation to occur as quickly as possible. Particularly in retrofitting existing industrial sites, processes and policies that expedite zoning and permitting that flow from the local to state to national level, should be prioritized. It’s been estimated that the process to rezone an industrial re-use site could take up to five years. Given that these sites were active in the past, priority should be granted to fast track their being so again as quickly as possible.
The days of big returns tied to low interest rates and easy money are gone, probably for a long time. The next opportunity to earn outsized returns for investors will come from backing the energy transformation underway in Wyoming and communities like Wyoming across the nation. And by doing so, investors will play a lead role in rebuilding America’s clean energy economy for future generations and the prosperity of all.