Citi Banker Says Clients Consider Climate Investments Outside US

Wind turbines in Luckau, Germany. Photo by Krisztian Bocsi /Bloomberg

Article content

(Bloomberg) — Renewable energy and climate technology companies that flocked to the US to profit from the subsidies provided by the Biden administration’s Inflation Reduction Act are reassessing whether the US remains the optimal place to run a low-carbon business, according to a senior Citigroup Inc. banker.

Article content

Article content

While there’s yet to be a noticeable exodus from the US, companies are weighing their options to see if there are more accommodating locations for investing in decarbonization, said Cathy Shepherd, Citigroup’s global head of corporate banking for the clean energy transition. Speaking on a panel at the BloombergNEF Summit in New York on Wednesday, Shepherd said Citigroup’s clients are exploring options in Europe and Asia.

Article content

Article content

“The conversation has shifted from what was a lot of our international clients looking at how they could deploy additional capital in this space into the United States to benefit from the IRA construct,” Shepherd said. “At the moment, what we’re really seeing is a wait-and-see approach for many of our clients that were already looking to invest in the US. And as they do that, they’re reevaluating opportunities that they may have, not just in Europe, but actually around the globe.”

Article content

Article content

The IRA, which has promised hundreds of billions of dollars in funding for clean energy, has since become a central target for Donald Trump’s assault on climate policies. When the bill was signed into law in 2022, it set off a green arms race as Europe, in particular, sought to compete with the vast subsidies and worried about companies moving their operations to the US to benefit from tax credits.

Article content

Article content

Three years later, the calculus has changed, raising questions about whether green capital will be redirected to jurisdictions such as the UK, Europe or Asia because of the backlash in the US.

Article content

“I don’t know that we’re completely seeing a move in change in capital flows yet, but the conversations are starting and are starting globally,” Shepherd said.

Article content

Asia is one region where the conversation is particularly active, she said

Article content

Trump’s attacks on policies that have supported low- carbon investments emerged after several years of targeted Republican attacks on investing and financing strategies that account for environmental, social and corporate governance issues. That’s contributed to all of the biggest US banks leaving the Net-Zero Banking Alliance and decreasing investor support for ESG-related shareholder resolutions, said Mike Garland, assistant comptroller for corporate governance and responsible investment at the Office of the New York City Comptroller.

Article content

“The punchline is that the attacks on ESG are having an impact,” he said at the BNEF Summit.

Article content