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Biden’s Clean Energy Plan vs. Banking Regulations

Regulatory Insights | Nov 1, 2023

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President Joe Biden’s ambitious clean energy plan is facing unforeseen challenges from banking regulators.

The administration's efforts to channel federal funds into clean energy projects through billions of dollars in tax credits are at risk of being undermined by impending banking regulations aimed at reducing the risk associated with large banks.

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The renewable energy sector, which heavily relies on substantial investments from banks and other financial backers, is now at a crossroads. In 2022 alone, banks invested $19 billion in clean energy projects such as solar and wind power, seeking returns in the form of tax credits and other benefits. However, the proposed banking rules threaten to increase the cost of these investments significantly, potentially stifling the growth of renewable energy initiatives.

The crux of the issue lies in the conflict between the transition away from fossil fuels and the need to ensure the stability of the global financial system. The banking regulations in question are part of a global agreement forged in Basel, Switzerland, following the 2008 financial crisis, aiming to minimize the risk of bank collapses by increasing the capital requirements for large banks.

The renewable energy industry, along with various Democratic lawmakers, is raising concerns about the potential negative impact of these regulations on the progress made by the Inflation Reduction Act, a cornerstone of President Biden’s climate policy. The industry is calling for an exemption for clean energy tax credits, arguing that these investments are less risky than other private equity ventures subject to the same capital requirements.

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Sustainable finance linked bonds and loans in the capital markets

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As the debate continues, the banking agencies responsible for issuing the rules have extended the public comment period, with the finalization of the rules expected in the coming year. The outcome of this debate will have lasting implications on the future of renewable energy and the role of financial institutions in supporting the transition to a cleaner, more sustainable future.


NCFA Jan 2018 resize - Biden's Clean Energy Plan vs. Banking RegulationsThe National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, artificial intelligence, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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