Can Tax Credits Fuel the Clean Energy Boom?

A $11m sale of IRA credits shows how US biogas firms can fund growth without borrowing

24 Jan 2025

Financing green energy often takes time. Aemetis Biogas has found a quicker route. The California-based firm recently raised $11m by selling federal tax credits earned from its renewable natural gas (RNG) projects. The credits, tied to dairy-waste systems and a solar-powered microgrid, were valued at $13.5m before transaction costs.

This is one of the largest known sales of transferable tax credits under the Inflation Reduction Act (IRA), passed in 2022. The law allows developers to sell credits instead of waiting to use them against future profits. For Aemetis, it meant fresh capital without new debt or ownership dilution.

“This is a powerful demonstration of how policy can fuel progress,” said one analyst. That may be optimistic, but the logic is sound. Developers, especially in niche sectors like biogas, face long timelines, rising costs and regulatory hurdles. Selling tax credits offers a way to unlock capital quickly, even if discounts apply.

Other developers are taking note. The process is complex. Sales require careful documentation and compliance with evolving federal guidance. But the benefits are increasingly clear, particularly as states push for more low-carbon fuels.

For Aemetis, the funds will help expand its RNG pipeline, which captures methane from dairy waste and injects it into California’s gas grid. That helps meet state and federal decarbonisation goals while generating valuable environmental credits.

The deal also signals a maturing market for credit transfers. Buyers now include banks, utilities and large energy users. As familiarity grows, transaction costs may fall, making the mechanism even more attractive.

Aemetis may not be the first to try this, but its scale and speed set a precedent. If others follow, tax credit monetisation could soon become a mainstream tool for financing clean infrastructure.