Suddenly, the US is a climate policy trendsetter

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Big change in how the incentives are targeted. In the past it was to the consumer, in the IRA, it gets money to the manufacturers which means they are building plants in the US.

It wasn’t long ago that Europeans were lamenting the United States’ lack of progress on climate. Now they’re racing to keep up.

When President Joe Biden signed the Inflation Reduction Act in 2022, he wasn’t just altering U.S. domestic energy policy. The law’s tax credits for domestic manufacturing and clean-energy project construction changed the global calculus of where companies should operate. Now even U.S. allies are scrambling to hang on to a piece of the booming clean-energy industry.

In mid-March, the European Union proposed policies to ensure the bloc’s clean-energy manufacturing base grows enough to meet 40 percent of its deployment needs by 2030. On Monday, France’s finance minister unveiled a set of tax incentives and subsidies to encourage clean-energy manufacturing in the nation and ​“reverse a long-term disindustrialisation trend in the country,” Reuters reported. Lapsed EU member Great Britain weighed in too, but mostly to express distaste for this ​“distortive global subsidy race” with allies.

Back in North America, Canada proposed a budget last week that explicitly models itself on the Inflation Reduction Act, with 15 percent tax credits for clean power plant construction and 30 percent tax credits for ​“the cost of investments in machinery and equipment” to produce clean technologies or the critical minerals they depend on.

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