US operators scour Inflation Reduction Act for incentives

In the struggle to reduce carbon emissions and increase renewable energy, the US Inflation Reduction Act (IRA), passed in August 2022, is a landmark development. The misleadingly named Act, which is lauded by environmental experts and castigated by foreign leaders, is intended to rapidly accelerate the decarbonization of the world’s largest economy by introducing nearly $400 billion in federal funding over the next 10 years.

Reducing the carbon intensity of electricity production is a major focus of the act and the US clean energy industry will greatly benefit from the tax credits encouraging renewable energy development. But it also includes provisions intended to “re-shore” and create jobs in the US and to ensure that US companies have greater control over the energy supply chain. Abroad, foreign leaders have raised objections over these protectionist provisions creating (or aggravating) a political rift between the US and its allies and trading partners. In response to the IRA, the EU has redirected funds to buoy its low-carbon industries, threatened retaliatory measures and is considering the adoption of similar legislation.