All right. Terrific. Well, thank you everyone. Hopefully that was a really productive keynote, and we would love to continue the conversation around the energy transition and the outlook for green spending. We've got two of the great thought leaders on this topic in North America. Jose Mas, the CEO of MasTec, which is a leading specialty contractor, has built an unbelievable business around communications and T&D and utilities, but increasingly in renewables. Brian Singer, who leads the GS SUSTAIN team. Many of you know him as my predecessor as the head of natural resources at Goldman, and now he runs our sustainability effort worldwide. Thank you both for being here.
Thanks, Neil. Thanks, Adit.
Neil, thank you for having us.
Jose, thank you for having us in your town of Miami too.
Well, how do you guys like Miami? This is a pretty spectacular place. We've got great weather. We're one of the few companies that's actually based here in Miami, and I'm a lifer here in Miami, so I love my city and, you know, welcome to everybody.
How's the soccer team going?
We're also the owners of the MLS franchise here in Miami, Inter Miami, which started a couple years ago. We're very excited. Our season kicks up in just under a month, so we're getting going.
All right. Best of luck to you guys.
Thank you.
Let me kick off with you, Jose, and begin on your outlook from MasTec and green spending by your customer base in 2023. Are you observing a growing sense of urgency, as more customers commit to net zero goals? How can we think about the build and backlog compared to 2022?
Yeah. It's fascinating. For those of you that aren't as familiar with us, we're one of the largest renewable contractors, if not the largest renewable contractor in the United States. You know, what we're seeing is an immense demand for anything that's renewable related from all of our customers, be it developers, be it our oil and gas customers to our utility customers. It's predominantly wind and solar. The realities are that with what happened with IRA, with what's coming down the pipe in terms of the tax credit extensions and the availability of federal funds, the demand is unlimited. Today, really the risk for 2023 for us is really identifying what projects we think are solid. The biggest issue with the business today on the solar side is panel availability and your access to panels.
The demand is that great. I think for 2023, a lot of the projects that we'll be working on were projects that were planned in 2022. I don't think they're necessarily IRA driven. I think the IRA driven projects will come later because it's being driven by, you know, panel availability. The tax credits will be there, it's really the preparation of the future of what will come. Our business this year from a growth perspective, the growth will predominantly be driven by solar. Our renewables business should be up about 35% in 2023 versus where we were in 2022 with the majority of that growth coming from solar. We think wind is gonna be a huge beneficiary of the IRA, especially in outer years.
There's a number of transmission lines that are currently being built that are gonna open up a significant number of wind corridors, so we expect a really hefty increase in wind business in 2024. The reality is, if we had the product and the supply chain to be able to double our solar resources this year, that's the level of activity that could exist. We're gonna be up nicely, but the reality is that over the course of the next few years, the growth potential in this industry is pretty immense.
That's an important point. Even in some of the I would think you've characterized it as more uneven execution over the last couple of quarters. The backlog has been growing very nicely. It's now about getting that backlog and recognizing it into revenue. Talk about that.
Well, 2022, we actually came into the year with the expectations that our solar business was gonna have a really big year. The demand from our customers was high. We had a lot of verbal awards. Probably should have done double what we did in 22. The circumvention investigation started in early 22 as related to solar panels. Really slowed down the industry, probably had a six-month impact where it almost shut down the industry. We've seen that improve. There's still issues, but it's significantly improved. Even with the growth that we're expecting in 23, the reality is the demand profile that exists far exceeds what's gonna be built in 23. I think it's gonna impact 24, 25, outer years. I mean, the outlook is just fantastic.
Yeah. Adit?
Brian, I'd like to come to you. You wrote about the Production Tax Credits, lowering the levelized cost of electricity to be the cheapest source. Can you touch on that? How do you think about that, the impact of that and the IRA benefits that companies like MasTec will have?
Yeah, sure. I'm gonna take a step back. We think we need to see globally $3 trillion of annual investment this decade to be able to be on track for net zero by 2050. You know, that's up about $1.8 trillion versus the annual run rate in 2016 to 2020. That's a global number, not a U.S. number. The need is very significant, and if you tack on infrastructure and clean water investment, that $3 trillion goes all the way to $6 trillion. This is a significant global theme that we think is going to continue and.
There are challenges, and some of the challenges have historically been on the returns front and what companies need in different sectors to be able to get the right rate of return to pursue projects. That is where the Inflation Reduction Act provides some very, very nice policy tailwinds. Particularly as it relates to solar and wind, the incremental benefit isn't potentially as important as extending that benefit in more certain terms into the next decade. Now there doesn't necessarily need to be the question in allocators' minds as to whether there's going to be changes in policy every couple of years and the reapprovals that are needed.
We think that's super supportive and does provide a nice runway, and I think it's some of what we're hearing about from Jose and from MasTec. Other technologies can be potentially more transformative, battery storage, green hydrogen, we've heard some of that at the conference as well, carbon capture and energy efficiency. The beauty of the Inflation Reduction Act is it really has touched in one way or another all of the different verticals that are going to be needed towards decarbonization.
You also mentioned that the capital deployment hasn't really happened just yet, and there's a bunch of things that need to happen. Jose, you mentioned something similar to that on the call as well. Maybe touch on that. What, what needs to happen when you see the benefit of that IRA actually translate to dollars being spent?
Sure. I think to us it's not as much of a surprise, and certainly interested in Jose's view on this as well, that, you know, this is a bill that wasn't expected to come together until it suddenly did at the end of July, and then got signed before the end of the third quarter, and it still takes some time before companies can actually say, "Great, I'm going to allocate incremental capital." There was still... I think they're still in the process of getting interpretations from the U.S. Department of the Treasury and the IRS of exactly who to go to and how to apply for the incentives that are there.
Taking some of the commentary that we've heard from companies would seem to suggest that in the second half of 2023 there could be a nice tailwind or acceleration in investment. It really depends a little bit more on the sector. We're hearing a lot from the petrochemical companies on the reindustrialization in the United States. This is less about the renewable side and more about the carbon capture and/or hydrogen side of the equation. It seems like there's a build for more into the second half of 2023 and into 2024. You're hearing this real time.
I agree. You know, for us, we were somewhat lucky, somewhat blessed. We announced an acquisition of a company called IEA, which was one of our public competitors in the renewable space. Spent, you know, a number of months negotiating that transaction. While we were negotiating, we were expecting the Build Back Better plan to actually get approved. It died. Once it died, we were actually able to negotiate a discount on the transaction. We announced the deal. Two days later, the IRA gets signed. It literally came out of nowhere. Nobody expected it. It was a huge surprise. It's gonna have a huge impact on all of our businesses. I think like everything else, right? If you were a developer and now you've, you know, you've got very clear directive and runway, which I think is one of the.
I completely agree with you, Brian. It's one of the. Probably the best thing out of the IRA is it gives people clarity for a very long period of time on what they're gonna be able to do. But it's like everything else, right? If all of a sudden the wind farm that you were planning and developing makes financial sense, now you gotta get in queue for turbine orders. On the solar side, you gotta get in queue for solar panel orders and all of the, you know, other miscellaneous materials that you need. So it takes time to build. So the reality is, while the IRA is gonna lift the industry to a pretty significant level, it's gonna take time for that IRA to start impacting the market relative to seeing it on people's income statements and balance sheets.
I do think it's a late 2023, early 2024 where we start seeing a lot of projects purely driven by IRA. The projects that we're gonna see in 2023 were projects that were pre-planned that are gonna benefit from IRA, but didn't necessarily come from IRA, and I think that's the distinction. Again, for the next decade, you're gonna see a huge level of activity based on the financial support that IRA gives, you know, projects to make them successful.
Jose, what type of projects do you anticipate actually happening as you think about making the turn into 2024?
Yeah. Look, for us, I mean, again, this bill, you know, in many ways I feel like, you know, we're blessed to say it was kinda written for MasTec, right? It has a huge impact to our renewable business, both on the wind and solar side. We have a huge pipeline business. Traditionally, it's been oil and gas. The reality is that there's a significant number of sequestration projects that are gonna happen on the carbon capture side. You're gonna have these, you know, giant pipelines built across the country that are picking up, you know, potentially ethanol from ethanol farms and the CO2 emissions, taking them on the pipelines and burying them in deep wells. You know, those are newfound industries for us that have significant financial federal support now that's gonna change our business. We look at.
You know, we are the largest pipeline contractor in the United States. We're gonna see a significant portion of our asset base convert to projects like carbon capture, convert to projects that include hydrogen. You know, we're impacted by. This bill actually touches all pieces of our businesses. It touches our power delivery business because of the transmission language and the transmission access that it creates. It impacts our renewable business, obviously. It impacts our pipeline business, and it even impacts our telecom business 'cause there was a significant amount of broadband spend in there, along with additional monies that were in the infrastructure bill. In our industry, I've been in this industry pretty much all my life. My father started the predecessor company. I've never seen the federal financial support across our industries that we're going to see for the next decade.
This is a question for both, Brian and you, Jose. One of the things that is frustrating is I think we can all see the immense opportunity set, but permitting is very difficult. Actually, the supply chain is difficult, but actually just getting through the local permitting can be brutal, even for projects that have a net positive impact on society and the environment. Do you see that changing? A question for both of you.
Well, obviously, Senator Manchin's been trying to pass a permitting bill. It actually is the one bill that would probably have the most dramatic impact on the industries that we serve. You know, not so much. It actually impacts the Mountain Valley Pipeline, which he's a big proponent of, but it's actually a huge contributor to transmission assets across the country. It would really spur transmission activity, which is so critical to ultimately get to where we want. Where we're building solar farms, where we're building wind farms aren't necessarily where the historical power was being generated, and thus the need for new infrastructure. While you would think that some of these green projects have much easier paths to permitting, you know, that's not always the fact. That's not always the case.
We need some permitting relief in the country. I think there is bipartisan support around it, although that's gonna be complicated 'cause bipartisan support, almost feels like it doesn't exist anymore. I do think both sides understand the issue, and I think over time, we're gonna get something that deals with it.
Yeah, look, we've talked in our research about green enablers, sectors early in the supply chain, where if we don't see investment in the shorter term, we risk having medium-term bottlenecks because these are long lead time projects. Electricity transmission is one. Copper, aluminum, semiconductors, cybersecurity. These aren't all areas that are thought of as green. Electricity transmission arguably is. Where we think we need to see investment and that there needs to be support for companies that are providing the lowest cost, lowest environmental footprint providers or products to make that all happen.
And as our utilities team has said for some time, it could be a decade more for transmission projects to actually get permitted. The potential for that to be accelerated in a way that can actually match supply with demand is going to be pretty critical, if there really is a lot of and should be a lot of dependence on trying to re-engineer the electricity infrastructure.
I mean, to Brian's point, We currently just started a transmission project which was 10 years in planning. Took 10 years to get that project going. There's a lot in queue, but the reality is that in a normalized fashion, that should be condensed. With a permitting bill like the one Manchin was proposing, could have been condensed to three or four years, which is a huge change.
Yeah. It's hard to see how globally we're gonna get to 180 million electric vehicles on the road in 2030 without significant investment in the T&D infrastructure. If you can't permit this stuff by 2030, how do you transition to a more aggressive electric transportation economy?
Yeah. The good thing is when you look at particular states, you know, permitting within states isn't that difficult for utilities. Right? What we have today is a hodgepodge of different assets that don't necessarily fully communicate with each other. We've got, you know, we've got, you know, multiple power grids around the country that really don't talk to each other, which is a problem in and of itself and something we should fix, but it's easy to work within them. It's very difficult to work, you know, across boundaries. Ultimately, I think that's where permitting needs to go. That's where, you know, federal attention needs to go 'cause I think it would have a huge impact on the entire electric utility side of the business.
You know, I think the willingness, when applicable, for public utility commissions to really invest in those long lead time projects is gonna be key. That becomes tougher in an inflationary environment when understandably, there is a lot of focus on, you know, how much higher rates are being passed on to the consumer. To be able to really take that long-term view and say, "Hey, we're gonna need this transmission, and it is a worthwhile project," is going to be pretty key.
Makes sense. Adit, do you wanna ask Jose about M&A?
Yeah. Jose, you've focused on diversification of your business over the last couple of years. INTREN and Henkels & McCoy are almost done at this point, and you've got IEA in the hopper. In terms of the integration, how do you think about the portfolio capabilities? Is there a need for more M&A going forward from here? Are there holes you need to plug, or is that geography benefit that you're looking at?
Yeah. Again, for those of you that aren't as familiar with our story, in 2020, we were about a $6.5 billion business. Majority of our revenues and our earnings were coming from what we call our oil and gas pipeline business. Again, largest pipeline contractor in the U.S. Came out of a great 2019, had huge expectations for the future around LNG and LNG export and a lot of lines that were being planned. 2020 hits, the pandemic. Obviously, demand for, for those commodities significantly dropped, and the concern was we may never build another pipeline in, in the United States again.
We took a hard look at ourselves, set out a goal to be a very different company, and started a path of really focusing on the power delivery side and the renewable side of the business. Made an acquisition in early 2021 of a very large electrical distribution transmission contractor in the northern Midwest. Followed that up with another very large transaction at the end of 2021. Last year, you know, towards the end of the year, did our transaction of the renewable contractor, IEA. Fast-forward a couple years, you know, this year we'll do, you know, hopefully over $13 billion of revenue. Oil and gas has gone from, you know, about half of our business to less than 15% of our business.
With all of that said, right, We're in an industry today where you look at our power delivery business, you look at our renewable business, you look at our telecom business, which I'm sure we'll talk about, and even you look at our pipeline business, and we've got tremendous tailwinds across all of the segments that we operate. We've gone through a massive transformation in two years. We've had our bumps, we've had our hiccups along the way, we think we're incredibly well-positioned for the future, especially with everything that's happening around us and with the federal dollars and really where the country's trying to go relative to its electric infrastructure. The question about future M&A, you know, we're trying to digest. We've levered up a little bit on our balance sheet.
We think we're gonna generate amazing cash flow this year. We think we'll be down roughly into the low 2s in leverage by the end of this year. We think we've got, you know, significant capacity. For us, our business is a people business, right? We've gotta hire talent. And to the extent that, you know, today as we think about M&A, it's talent related. If there's companies out there that we can pick up or we can pick up significant talent, repurpose their talent or move their talent, those are things that we'd still look at. You know, the reality is that in a rising interest rate environment, there are a lot of companies out there that are struggling. You know, we had a lot of competitors that two, three years ago, you know, might have sold out, private equity might have bought.
Companies got levered up. Maybe they had some performance issue, All of a sudden leverage that was 4x or 5x has turned into 9x or 10x . You know, those are companies that in a rising rate interest environment are gonna really struggle 'cause they're gonna have a hard time paying off their debt. At some point, that's gonna create a lot of opportunities in our industry either to repurpose those assets or potentially see, you know, some of those businesses fail or close, and that, you know, creates further opportunities for the more stable contractors. I think in those kind of opportunities, we would still be aggressive around M&A.
Can you also touch on the unionized labor, the non-unionized labor, dynamic around that? I think with a lot of these acquisitions now you've got a footprint in both end markets. It's a lot tied to the geography. Maybe just touch on what geographies you might be able to expand into or need to expand into, or is it all set in terms of your presence now?
Yeah. Starting with the union labor comment. One of the interesting things about the IRA is that there are bonuses in place if you use both prevailing wage and apprenticeship programs. Historically, when you think about prevailing wage and apprenticeship, those are unions. One of the real drivers for us doing the IEA transaction was IEA was predominantly a union-based renewable contractor. Historically, we were a non-union renewable-based contractor. It gave us a lot of challenges as a business because most of our customers built both. They would go into a geography and build non-union, but they had projects where they needed to build union, and we couldn't offer a full set of services to those clients.
We could only work on their non-unionized renewable assets. The acquisition of IEA opened up a significant customer base for us because it gave us the ability to perform both of those services. You tack on the benefit of IRA having bonuses for using unionized labor, which both include prevailing wage and apprenticeship programs, and we think there's gonna be a push towards more unions relative to where it makes financial sense. Developers will look at it, they'll look at the bonus afforded to it. All of the rules aren't written yet, so there's still some ambiguity around that, which is part of what delays, you know, some of the IRA from impacting.
Then they'll make a decision, right? Is it financially feasible to pay the extra rate required for this relative to the bonus that I'm getting? I think that's a huge advantage that we have today that we didn't have prior to the IEA transaction. That's very important.
The last one around M&A is a big part of what you talked about with both these acquisitions was these were lower EBITDA margin businesses. Part of the logic was you can kind of high grade the margin to be consistent with the rest of your portfolio. Where are you in that process?
You know, you look at Henkels. Henkels was the biggest acquisition that we've ever done. It was roughly a 5% business when we bought it on a trailing basis. If you look at our performance this year in that segment, you know, we're gonna perform at just over 9%. I think that the transformation that we were able. We acquired that business roughly the 1st of January of last year. Within, you know, the first 12 months, we were able to significantly change our margin profile. We've got great growth opportunities. We're investing a lot in that business, so I think there's gonna be tempered improvements in margin as we go forward. The reality is that, you know, we were able to quickly rationalize customer bases.
There was, you know, certain customers that they had been working for a long time, or their returns weren't there. You know, today, the reality is that, you know, those that have the labor are gonna win. I mean, we are in a labor-constrained market in the industries that we serve. You know, albeit, you know, forget about unemployment rates, just having the skilled labor with the knowledge to be able to do the work, is really the key driver in our business. Being that provider of those labor services makes a huge difference. And then being able to repurpose that labor into the, you know, the best possible accounts and relationships that you can have.
It's not just about margins today, it's about building relationships with customers that you think you can build a great book of business with over a long period of time. We started transitioning some of that this year. We'll continue to do so. You know, we're really excited about the opportunities that are in front of us.
Yeah. Thanks, Jose. Brian, let's talk a little bit about ESG and the evolution and move into ESG 2.0. One of the things that you've been an advocate of is for ESG funds to resist more of an exclusionary framework and move towards more engagement. Why do you think that's important? Then talk about whether that's being embraced or resisted.
Yeah, sure. You know, we do think that the energy reliability issues that really preceded the Russia-Ukraine war, but have only been exacerbated over the last year, are causing a mindset shift. One will see it all in a day. It's causing a mindset shift in sustainable investing. We call it from aspiration to action, that it's no longer good enough to just desire to support goals, sustainable goals. There's now greater urgency to accomplish them. If we're trying to get from point A to point B, one has to look more holistically across the supply chain at where there are needs for investment to do that. If we look at where ESG fund assets are today, parked, they're highly concentrated in market weight positions, in market bellwether stocks, the Amazons and Microsofts and Googles of the world.
The overweight positions are highly concentrated in solar, wind, water, where we could walk out on the streets of Miami and there would be no debate about their impact. We love solar, wind, and water. There are also opportunities earlier in the supply chain as well, and that's where we see a lot of opportunity for discovery value. The response that we've gotten as we've talked, not just here in the U.S., but in Europe and Asia, is, "I agree with you, but I'm scared." To kind of put it in, to paraphrase multiple investor comments, I don't wanna spend 50 minutes out of an hour-long client meeting defending why I own 1 stock in my portfolio just because it isn't the purest of the pure. How do we get through this?
Instead of FOMO, we call this FOME, fear of misaligned exposure. How does one get over that? It's really data and quantifying what that impact could be. That's a lot of what we've been trying to do at GS SUSTAIN, is to try to look and provide resource and data tools, which by the way, are available to all of you as clients, that can quantify what is the revenue impact that could be exposed either to regulations like the EU Taxonomy or to individual Sustainable Development Goals. What is the percent of CapEx that are exposed? How does that look in the future with your help, Neil and Adit, forecasting greenhouse gas emissions, and emissions reductions by year, by company, forecasting green revenue mix and green CapEx mixes?
We think those are going to be essential tools trying to measure what that impact is that can justify, and offset and mitigate some of the fear of misaligned exposure that may be out there, and that would be consistent with fund objectives. We think that's the direction of travel. We don't think exclusions are going away. We do think we're going to see a greater push towards engagement over time that's going to broaden from the investable universe.
Yeah, that'd be healthy. Jose, let's talk about some financial considerations as we think about 2023. You've already done a great job of kinda outlining some of the moving pieces going into 23. For the audience, maybe you can rehash your expectations for next year.
Sure. Again, we're expecting to do about $13 billion in revenue for 2023. Our margin profile in 2023 should be up, you know, somewhere between 75 to 100 basis points in 2023 versus 2022. You know, some of that'll be second half driven. If you think about our first half to second half, our first half margins for the year should be up about half a point, our second half margins should be up about a point. One of the challenges that we do have going into 2023 is, you know, we did buy IEA. IEA had a lot of margin pressure. They have a lot of margin pressures in the first quarter. If you look at their first quarter of 2022, it adds in about $400 million to MasTec.
They lost about $17 million in 2022. We think it'll be better in 2023, but it's diluted to our margins. We think our margin profile in the first quarter of 2023 will be flat with 2022 despite that. In our oil and gas business, we're, you know, we're gonna start our pipeline services business. We're gonna start, you know, really prepping for what we think is gonna be a big year second half growth. We'll have some expenditures in that business as we gear up. You know, we feel great about our portfolio. The reality is we've looked at our mix of business in a very conservative way. We think there's, you know, a lot of room for upside potential, both from a revenue and a margin perspective.
You know, we try to do as best as we can since the company's changed so much to give very clear direction on how we see the business for the full year, how we see it in the first quarter, how we see it in the first half, how we see it in the second half, to really align everybody with how we see the business and how we expect to perform.
Jose, does that guide include Mountain Valley Pipeline in there?
It doesn't. You know, we've talked about our pipeline business going from about $1.2 billion in 2022 to $1.7 billion to $1.8 billion in 2023. We are the builders of Mountain Valley Pipeline. We've got a lot of work left to do there, but, you know, the reality is we don't know when that's gonna restart. That probably has, you know, $700 million to $800 million impact on our business. If that went, it's gonna obviously improve. At some point, we're very confident that that line will finish, whether it's in 2023 or not. We don't know, so we've kept it out of guidance.
Thank you. Jose, for 23, Mountain Valley, like you said, is not in, the numbers. On the oil and gas side, what kind of activity are you actually expecting towards the back end of the year?
Couple things, right? In Mountain Valley, we're still, you know, we're still working on the right of way 'cause we've gotta keep the right of way safe. There is activity in Mountain Valley, just not to complete it, which is where the big dollars are. Outside of that, what we've seen is we've seen a massive increase to demand, especially in the southern shales, really everywhere, right? The takeaway capacity that, you know, takeaway capacity issues that existed five, six years ago, they're back, right? We never expected that to happen so quickly post-pandemic, but the reality is drilling's increased, and there's a lack of takeaway capacity for gas in most shales, specifically the easiest ones, the Permian in the south. We've seen a dramatic increase to work activity related to that.
We've got a lot of projects that are starting in 2023, and quite frankly, we've got really good visibility into 2024 and even 2025, which is we never thought we'd be able to say again that we'd have, you know, two, three years out visibility in that business relative to where we were just a year ago.
Jose, on the communication side, you've got a pretty decent presence in that market. You've been talking about 5G for some time. There's some activity happening, but I think most of the wireless activity is expected in 2023. Maybe talk about the dynamics there. What are your customers saying? Where do you see, like a dollar allocation happening? What does the trajectory of the 5G look like in 2023, 2024 maybe?
We, you know, our roots in our business started as a telecom contractor. You know, we do everything related to wireline and wireless activity. On the wireless side, we're the largest builder of wireless networks in the country. We work for, you know, all of the major carriers, AT&T, Verizon, T-Mobile, Dish, building out the networks on their behalf. You've got tower owners like Crown Castle, the American Tower that might own sites. In some cases, we build them. In all cases, we're putting up the equipment for the carriers on sites. Whether they're specifically owned by the carriers or owned by the tower companies. You know, 5G is very different than any of the historical technologies that we have, it's a densification play.
If you think about historically, you have these major, you know, cell sites, these big cell sites across the country. They transmit very broad coverage, that's how we got 2G, 3G, 4G, even into LTE. The big difference with 5G is we're putting antennas every 500 feet, to have true 5G capacity, you need an antenna every 500 feet everywhere across the country. All of these antennas need to be connected with both power and fiber, which is one of the biggest issues because the fiber network to support that doesn't necessarily exist. What did we see? Post-pandemic, we saw a huge move by a lot of the telco and internet providers to expand speeds in people's homes and businesses. Obviously, with so many people working remotely, people needed to have, you know, access to high-speed internet at home.
There's been an enormous amount of funding and build-out relative to the wireline assets of the business. Whether it's, you know, AT&T or the cable companies like Comcast and Charter, they are deploying a huge amount of capital in both rural and non-rural areas. There have been specific federal funds allocated for some of this. For example, you have what they call RDOF or the Rural Digital Opportunity Fund, which was a $20 billion program to promote expanding fiber into rural markets. Of that $20 billion, $10 billion got awarded. About $7 billion has actually made it into the street. It's had a massive impact on the industry.
You know, the wireline side of our business today is as active as it's ever been going back to the, you know, the late nineties, early two thousands when the internet was being expanded and you had all the fiber being laid for the internet. We're in a very similar cycle to that just with that investment. Post the ARPA funds, there have been another $60 billion of allocated federal dollars that are gonna go into the broadband space between the Infrastructure Act and IRA. The reality is that that's such a massive number relative to where the industry... I'm not really sure where it's gonna go or how it's gonna get spent, but it's gonna be split between a lot of what's happening on the wireline side, and it'll eventually play into wireless.
One of the issues that the wireless companies have is they're dependent on these fiber networks that are being built to ultimately expand 5G to the full capacity that it needs. I think we're beginning to see that. You know, both are growing very rapidly. The wireline business probably growing at a more rapid pace than the wireless industry. Today you've got, you know, AT&T and Verizon and others, you know, significantly ramping up their 5G spends to be able to give you capacity. Most of you know, you pick up your phone, it'll say 5G on it, the reality is that to have full coverage and to have full capacity, you need a much more robust and densified network.
Jose, on the margin comment again from earlier, 2023 is going to be a lot of that margin expansion story. Some of that also comes on a year-over-year basis if you compare it to a couple of industrial projects that were challenging in the year, and then you had a couple of tweaks that you had to make to the contracting strategy. Maybe talk about that. I think the industrial projects are supposed to be over in the 4Q. Just give us an update on that and how you think about the margin progression.
Yeah. You know, one of the things that we did in 2020 as we really thought about transforming the business is we got more active in the industrial space. What does that mean? We were doing a lot of mechanical work. We started doing turbine installations. We built some of the first, you know, dual burning turbines in the U.S., which burn both hydrogen and gas. They start off as a gas engine, and they're ultimately capable of burning hydrogen. We got into a number of projects. You know, some of it went really well and some of it didn't, right? We've been very vocal about that.
We've had, you know, our bumps in the road, our learning that we've had to do in the last two years that have impacted our margins in that business. As we kind of move into 23, we've talked about a lot of that business shifting to a cost-plus environment. The majority of our industrial business in 2023 will be driven by cost-plus. It's been an expensive lesson, but quite frankly, we think it's uniquely positioned us. When we think about the future and we think about hydrogen and the hydrogen hubs, think about a company like MasTec and where we fit. You know, most of those hydrogen hub projects have huge renewable components to them. Again, we're, you know, one of the largest, if not the largest renewable contractor in the country.
We tick that box. When you think about pipelines and the pipelines that are gonna be needed to, you know, function those hubs, we build the pipelines. Again, we have the industrial capabilities of having dealt with hydrogen in the past. I think we're the only company that actually ticks all those boxes and that has the capabilities to do that, for a lot of those projects. Those are massive projects. They're not necessarily projects that we would be looking to take on in their entirety. When you talk about IRA and really some of the things that IRA is gonna support, hydrogen's a big component of that, and I think we've got a great, real avenue to play in that space in a, in a meaningful way.
You know, very important for us and something that we've really worked on. While it's been challenging, I think that industrial has added something to our resume that truly makes us somewhat unique in the industry.
Brian, I'll close with you here, which is on the Inflation Reduction Act to build on Jose's comments. We featured MasTec as a compelling idea to play the theme. For the investors, what are other ideas in your view to get exposure to what is a huge bill?
I mean, look, as mentioned, there's opportunities through the supply chain. If we think about some of the areas that are most transformative, you've got a number of the battery storage stocks that Brian Lee, you hear about here and in Brian Lee's coverage on the green hydrogen front. You can run the gamut between the highly underweight and ESG funds, Air Products and Linde of the world that know hydrogen well, to the more overweight or less underweight companies that are more on the pure play side, like the Nel and De Nora. Infrastructure contractors, MasTec. In our green CapEx work, one of the things that we did was try to look at companies that.
Fusing both ESG metrics and financial fundamentals together and looking for companies that have revenue exposure of greater than 25% or 30% to given a related Sustainable Development Goal, aren't in the bottom 20% from an environmental and social performance, but have corporate financial returns. We looked at cash return on cash invested that are better than their industry peer average, and are buy rated by analysts like yourselves, and MasTec was one of them there.
On the carbon capture front and then also on the energy efficiency front, it's really a lot of the more of a services oriented, and that expands beyond services as we're talking about here at this conference, but would also include a number of the industrial companies, you know, Carrier, Rexel of the world that are beneficiaries as well or beneficiaries of broader energy efficiency. You know, there's really, I think a lot of stocks through the supply chain, some of which are the pure play companies in the solar wind arena and battery storage, some of which are more diversified companies that we think are attractive and will get tailwinds from the Inflation Reduction Act.
Great. We've covered a lot of ground in a short period of time. Thank you so much, Jose, for having us in your town.
Well, thank you for having me here, Neil.
Brian for sharing your wisdom as always.
Thank you.
Thank you.
Thanks.