Even though it was just passed in August, the Inflation Reduction Act is already benefitting the renewables sector, according to Fred Edwards, ETF specialist at Neuberger Berman. Speaking with VettaFi at Exchange, Edwards explained that while it may be hard to see the immediate benefits right now, the Inflation Reduction Act is already helping to expand the focus on different industries within the megatrend of decarbonization.
“There are emerging trends, around, say, nuclear energy perhaps where the focus was wind and solar maybe three months ago,” Edwards said.
Another big piece of the puzzle in carbon transition is electrification. Edwards said that electric utilities, which tend to be safe havens when markets are down,” are “the first iteration of this whole [electrification]process.”
The benefits that the Inflation Reduction Act are providing the renewables sector is a huge tailwind for the Neuberger Berman Carbon Transition & Infrastructure ETF (NYSE Arca: NBCT). NBCT seeks to invest in companies that are focused on or are transitioning their businesses to focus on one or more of the following themes:
- Low-carbon resources: issuers focused on producing renewable energy, such as solar, wind, geothermal, and green hydrogen, and the related storage and transport of these energies.
- Electrification: issuers that help enable the replacement of technologies that use higher carbon-emitting fuels with those that use low-carbon resources as a source of energy, including those that support smart grid and electric vehicle charging solutions, as well as electricity transmission and distribution that helps expand usage of low-carbon solutions.
- Carbon reduction solutions: issuers that directly facilitate the carbon reduction goals of infrastructure owners, including innovative raw materials, industrial gases, engineering and construction service providers, environmental services providers, and environmental technology providers.
Because NBCT is actively managed, the fund’s managers can nimbly move through a rapidly evolving industry.
“Things change so quickly,” Edwards said. “There is a big picture, but there’s also the micro that’s managed in real time.”
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