On August 16, 2022, U.S. President Joe Biden signed the Inflation Reduction Act (“IRA”). The IRA paves the way for a broad stimulus package centered around three subjects: (i) the stimulation of clean energy initiatives that secure America’s energy supply, (ii) increasing the affordability of certain prescription drugs; and (iii) paying for the first two by introducing significant changes to the tax code.
The bulk of the funding authorized by the IRA is earmarked to encourage American leadership in clean energy tech, energy efficiency and energy independence. Almost US$369 billion out of the US$ 437 billion of total investments proposed is related to energy and climate change.
In two papers, Jeff Amrish Ritoe, HCSS Strategic Advisor Energy & Raw Materials, will specifically focus on the possible impact of the proposed policy changes on the global energy landscape. This first paper will share observations on the impact that the IRA can have on an American EV and battery materials supply chain.
Is the IRA the perfect tool to help the U.S. become the leader in clean energy tech? That remains to be seen, the author concludes.
The Biden Administration seems to take a catch all approach in which it tries to regain American leadership in the fight against climate change by setting a target to reduce GHGs with 40% by 2030 whilst ensuring the creation of new jobs through investments in clean energy (tech) projects and onshoring domestic manufacturing. But the U.S. is still a hostile environment for launching new legislation to combat climate change. And with a former Republican President keen to run again in 2024, time will tell whether the IRA is here to stay and will have a chance to become historic.
A second paper (upcoming) will look into the impact of the IRA on other clean energy technology solutions.
Cover image source: Department of Energy Secretary Jennifer Granholm, 16 August 2022; “President Biden signs the Inflation Reduction Act into law”.