The Inflation Reduction Act, signed into law in the United States last summer, is “a game changer” for U.S. decarbonization efforts, spurring a paradigm shift in thinking about (and the economics of) climate change.
That has geopolitical consequences, since the countries that lead climate change mitigation efforts will not only reap tremendous diplomatic and soft power benefits, but will earn revenues and returns that boost their standing in the race for global economic leadership.
It is worrying then that the IRA has also driven a wedge into U.S. relations with its closest allies in Europe and Asia. The key point of contention is the subsidies that are an integral part of the legislation. European political leaders complain that the provisions are protectionist or, worse, efforts to strip Europe of its climate industries by luring them to the U.S. There is no need for the substantive efforts that finally and seriously address climate change to drive those countries apart.