In the United States, it is an excellent moment to be in the decarbonization industry. The Inflation Reduction Act, with its $374 billion in green incentives, subsidies, and grants, was intended to attract private enterprises to engage in the transition away from fossil fuels. Initial indications indicate that the IRA may be operational.
According to an analysis conducted by American Clean Power, a lobbying organization for renewable-energy producers, the mere prospect of decarbonization reward triggered $40 billion in investments and the creation of roughly 7,000 jobs in the final few months of 2022.
Things are so rosy for the green industry in the United States, in fact, that the European Union feels left out. It is miffed that many of the IRA’s tax breaks and subsidies apply only to American-made products, tempting European companies to open operations here.
This week, economy ministers from Germany and France are in Washington, D.C., hoping to persuade the U.S. to allow EU-made electric cars and batteries to qualify for subsidies.
All of this wrangling implies that many international leaders now perceive the energy shift as not only unavoidable, but also profitable—a source of wealth and job creation. This “race to the top” strategy to climate change mitigation is novel.
For decades, the climate crisis has been portrayed as an issue that requires social response, a tragedy of the commons that necessitates shared suffering. Fixing the climate is now considered as having “huge economic, security, and geostrategic benefits,” rather than demanding sacrifice.
Global investment in decarbonization will top $1 trillion in 2022, putting it on level with investments in fossil fuels for the first time.
The IRA was created in reaction to China’s worldwide domination in numerous green industries. With the EU in the mix, the three largest economies in the world are all trying to ride this wave. Decarbonization is no longer framed as the enemy of economic growth. Instead, it is seen as an engine of economic growth. The “green economy” is becoming just “the economy.”
Reference- IRA Act, Bloomberg, The Guardian, Forbes, The New York Times, The Atlantic, Business Insider