CLIMATE UPDATE - 9 AUGUST 2022

On the weekend, the US Senate passed a wide-ranging bill aimed at lowering carbon emissions.

This development represents a full pivot from prior negotiations that broke down in mid-July and we now have the majority of Biden’s climate plan approved in a slimmed down bill. We have seen our climate beneficiaries rally significantly on the back of this news, sending Munro’s Climate Fund up over 10% in July.

We view this as a significant turning point for decarbonisation in the US economy and outline some key points in the bill that support this thesis.

The combined investments in the FY2022 Budget Reconciliation bill puts the U.S. on a path to roughly 40% emissions reduction by 2030, and represents the single biggest climate investment in U.S. history, by far.

Some key items include:

• Methane penalty: $900 per metric ton of methane emissions that exceed federal limits in 2024, rising to $1,500 per metric ton in 2026
• Carbon capture and storage tax credit of $85 per metric ton, up from $50
• $30bn for solar panels, wind turbines, batteries, geothermal plants and advanced nuclear reactors, including tax credits over 10 years. Replaces short-term wind and solar credits;
• $27bn for ‘green bank’ to support clean energy projects particularly in disadvantaged communities
• $20bn to cut emissions in the agriculature sector
• $9bn in rebates for Americans buying and retrofitting homes with energy-efficient and electric appliances
• $60bn to support low-income communities and communties of colour, includes grants for zero-emissions technology and vehicles, highway pollution mitigation, bus depots and other infrastructure loctaed near disadvantaged communities
• $10bn in investment tax credits to build manufacturing facilities that make electric vehicles and renewable energy technologies
• Tax credit of up to $7,500 for the purchase of new clean vehicles, and offers for the first time a credit of $4,000 for used electric vehicles for households with a maximum income of $150,000 a year

This Bill will provide a decade of regulatory certainty in the world’s largest economy and significantly support the companies we invest in that will help enable the decarbonisation of the planet.

This will likely benefit all four of the quadrants (sub Areas of Interest) of our climate thesis as shown below.

‍

‍

IMPORTANT INFORMATION: Past performance is provided for illustrative purposes only and is not a guide to future performance. The material contained in this publication has been furnished for general information purposes only as is not investment advice of any nature. There can be no guarantee that any projection, forecast or opinion in these materials will be realised. As an actively managed fund, Munro continually assesses each portfolio holding and the views expressed in this document may change at any time subsequent to the date of issue. This information has been prepared without taking account of the objectives, financial situation or needs of individuals. No representation or warranty is made concerning the accuracy of any data contained in this document. Bulletpoint information sourced from Financial Times dated 8 August 2022. Prior to making an investment decision, retail investors should seek advice from their financial adviser. This document is intended as general information only. Issued 9 August 2022

‍