The US Inflation Reduction Act: Implementation and Global Responses

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What is the Inflation Reduction Act?

The IRA is the largest ever exercise in deploying tax subsidies to mobilise private capital toward a policy goal – in this case, accelerating the energy transition.

So far, corporates have exceeded the level of expected investment since the legislation became law in August 2022. Congressional estimates of IRA tax credit spending have more than doubled from $570 billion with credible outside projections as high as $1.2 trillion in federal funding.

The IRA, along with the Infrastructure Investment and Jobs Act (IIJA) and CHIPS and Science Act, will mobilise trillions in private capital to address the climate crisis, as well as improve US economic competitiveness and productivity.

The IRA, now the largest investment signal for clean energy projects globally, will inform US domestic politics, other countries’ trade and climate policies as well as patterns of geopolitical competition and cooperation going forward.

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