Inflation Reduction Act Changes Everything

It’s hard to remember the name of this law, because it actually doesn’t have anything to do with inflation but everything to do with addressing the climate crisis. The Inflation Reduction Act (IRA) is the largest investment in clean energy in the history of the world. It is the first significant exceleration towards a pathway to netzero, as it is designed to decarbonize the US economy, shore up supply chains, and reduce dependence on China.

The law includes $370 billion funded by the Federal government over the next ten years. Incentives in the form of tax credits, loans, and grants are designed to incentivise domestic manufacturing.

The bill represents a hugh and significant shift in the whole US economy – a significant transition to a greener economy, with secure supply chains.

The first bill to pass was the Chips and Science Act - a much smaller bill for %452 billion to incentivise research into semiconductors and their production in the United States.

There two laws together have already helped stimulate more than $220 billion in manufacturing and clean energies and semiconductors. They will easily create more than 100,000 jobs.

Many states, mostly in Republican districts are already benefiting from these bills, such as Arizona, Ohio, Michigan and Upstate New York. Georgia is now being called the battery belt in the South where many new green industries are emerging such as QCells and Freyr, to produce semiconductor chips.

GE embodied the idea that you could build things more cheaply overseas, and sell them in America. But now GE has built a new factory in Schenectady, New York where they are investing $50 million and adding 200 union jobs. It will be the largest onshore wind-and-cell facility in the United States.

Gone are the days of globalization and free-market capitalism. The Federal government is now actively engaged in promoting and developing a green industrial strategy. To fully decarbonize industry will require guidance from the government and private investments.

IRA has drawn a line in the sand. Post-liberal politics and globalization are things of the past. The market doesn’t always know best. The government has a necessary role in creating good policies that benefit the American citizens, their ecomony and move us towards a greener economy that will address the climate challeges we already face.