The Inflation Reduction Act (IRA) is expected to raise prices for platinum, a key component of many green technologies, by expanding tax credits to drive demand for hybrid and electric vehicles, charging stations and refueling, green energy storage and other clean energy investments.
“The Cut Inflation Act is expected to increase demand for platinum and platinum group metals in the short, medium and long term,” Trevor Raymond, director of research at the World Platinum Investment Council, told FOX Business. .
Platinum and palladium, along with rhodium, iridium, ruthenium and osmium, constitute the platinum group metals.
Platinum is used in jewelry, but the precious metal has industrial and automotive applications. Demand is heavily influenced by the automotive industry, where platinum, palladium and rhodium are used in parts, including catalytic converters. Platinum and palladium are often interchanged in the manufacture of converters, depending on the price of each metal.
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If the IRA increases demand for alternative fuel vehicles, that would be a plus for platinum and palladium. The converters of hybrid vehicles contain more of these elements than gasoline vehicles. For example, the dual-exhaust Toyota Prius has two converters.
Tax credits for clean vehicles
The IRA offers tax credits of:
– $40,000 for the purchase of a clean utility vehicle weighing 14,000 pounds or more, lighter vehicles eligible for a $7,500 credit
– $7,500 for the purchase of a clean new vehicle costing $55,000 or less ($80,000 for SUVs, pickups and vans)
– 30% or $4,000 for the purchase of used plug-in electric and fuel cell vehicles by customers with incomes up to $150,000 if married, $112,500 if chief family or $75,000 if single.
Help for green hydrogen
The bill includes incentives to promote green hydrogen, another technology that relies on platinum. Platinum serves as a catalyst for the production of green hydrogen used in fuel cell electric vehicles and emergency or remote power supplies. Green hydrogen is produced when electricity is generated from the sun, wind, water or other renewable resources.
“We believe the Cut Inflation Act will lead to a dramatic increase in funding for decarbonization and, in particular, the generation and use of green hydrogen to significantly reduce carbon emissions and dependence on fuels. fossil fuels,” Raymond said.
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Green hydrogen incentives include:
– A credit of $3 per kilogram for producers of clean hydrogen, which would effectively make green hydrogen the cheapest in the world, according to some sources
– An extension and expansion of the tax credit for alternative fueling goods, such as electric charging stations or hydrogen fuel cell charging stations, with a new credit limit of $100,000
– A new credit for energy storage, including hydrogen storage.
“We believe this provides strong support for the growth of fuel cell electric vehicle and hydrogen refueling infrastructure,” Raymond said.
“We believe the Cut Inflation Act will lead to a significant increase in funding for decarbonization and, in particular, the generation and use of green hydrogen…”
Supply and demand for platinum are both expected to fall this year and rise in 2023 as the auto industry continues to sort out supply chain issues, according to estimates released last week by Russian metal miner Nornickel. The outlook until 2030 is negative.
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Current platinum prices are little changed since January, although they rose briefly due to supply fears when Russia invaded Ukraine on February 24.
Platinum started 2022 at $954 an ounce and peaked on March 8 at $1,153, a gain of 21%, according to data from Macrotrends. Since then, prices have fallen but have been rising since mid-July with the passing of the Inflation Bill.