When the U.S. Inflation Reduction Act (IRA) passed a year ago, some of our international allies greeted it with a level of concern if not consternation given the IRA’s focus on expanding U.S. clean energy markets. But in fact, the IRA was not intended to be, nor is it, protectionist. Its mission, coupled with the Bipartisan Infrastructure Law and the CHIPS and Science Act, was to spark private- and public-sector investment across the U.S.—in red and blue states—and beyond, while restoring U.S. leadership on the global stage.
In its first year of implementation, the IRA has been a game changer. It spurred a race to the top. The world’s major economies rushed to develop their own competitive climate plans and opened up unprecedented opportunities to take a big bite out of global carbon emissions while enhancing domestic economies, growing good-paying clean energy jobs, saving families money, and improving air quality and health outcomes—especially for communities most in need.
The European Union’s Green Deal Industrial Policy was announced in February this year. In March, Canada’s budget included IRA-inspired tax credits to spark production of minerals and EV components while strengthening labor conditions. France’s new climate framework was unveiled in May. And Germany plans to expand its battery cell production, create a new hydrogen center, and initiate investments in chip manufacturing.
These plans are designed to level the cost of renewables and other clean energy solutions. Doing so will allow clean sources to more effectively compete against coal and other damaging fossil-fuel-reliant technologies and products that have too often avoided accountability for the global climate and health damages they caused.
In the U.S., companies have announced or moved forward with projects in 44 states since the IRA was passed, accounting for more than 170,600 new clean energy jobs and $278 billion in new investments. Our goals under the Paris Agreement to cut greenhouse gas emissions by 50-52% below 2005 levels by 2030 are now within reach. The U.S. can head to the global COP28 climate negotiations this fall ready to walk the walk, not just talk the talk.
But as we celebrate the biggest climate investment the U.S. has ever made, let’s also recognize that we can, should, and must do more now to reduce—and over time eliminate—our reliance on fossil fuels. And we must support developing nations on this path as well. We cannot solely rely on the fast buildup of clean energy if we hope to deliver net zero by 2050. We must demand reductions in fossil fuel exploration, development, and use now to ensure the transition to a cleaner, safer, healthier, and more stable world for all countries.
First, let’s push harder to nudge fossil fuels out of domestic and international markets and shift to energy systems that meet the needs of developing countries at lower costs. This will not only help strengthen economies but also create cleaner air to breathe. African nations, for example, can benefit greatly from leapfrogging to a clean energy future and yet over the last 20 years, only 2% of global renewable energy investments were made in Africa. Meanwhile, investments for polluting oil and gas projects, including from American and European multinationals, continue to pour in, at a great cost to the continent.
Second, we must push to ensure that every developed country meets or exceeds its country-level commitments already made to the developing world, as well as marshall the global public finance resources commanded by the World Bank and regional development banks. And we must demand full and fair consideration of the costs of political inaction versus the full benefits of public investment in climate action. As Barbados Prime Minister Mia Motley so clearly articulated when announcing the Bridgetown Initiative last September, developing nations need multilateral development banks to focus on their missions, not just higher returns, so nations can open up private investments in ways that work for them, define their own paths toward economic security, and deliver the transition to clean energy we need.
Third, public investments are simply not enough; we must entice more private sector investment in the developing world if we hope to preserve and protect the world’s critical natural resources and support the growth and development of clean energy economies that align with country-specific needs and opportunities.
A functioning carbon credit trading system can entice private investments—lowering project costs as credits are generated and sold to corporations and other institutions—as a way to meet their environmental, social, and governance (ESG) commitments. Unfortunately, concerns about greenwashing and months of debate about new and improved carbon market rules have left both sellers and buyers facing significant uncertainties that are stalling investment and frustrating corporations and institutions. What we need is a more realistic and credible system that utilizes the latest technologies, ensures transparency, and jumpstarts finance to prevent further deforestation and meet the clean energy needs of developing countries.
It is time for all of us to stop turning a blind eye to the developing world when it continues to be hit by climate impacts first and worst, when it has contributed the least to the climate crisis, and when it literally has the fewest resources available to respond to the havoc that climate change is wreaking. Just last month, for example, India stopped exporting rice—food that 40% of the world currently relies on as a staple in their diets—when they were hit by heavy monsoon rains that damaged domestic crops. The impact will be far-reaching: Farmers will lose crops and money, while families suffer from hunger, malnutrition, and other life-threatening health challenges.
So on this one-year anniversary of the IRA, let’s do more than celebrate its ongoing success and push to keep implementing its provisions fast and furiously. Let’s push Congress to meet our international climate financing commitments to provide $11.4 billion per year by 2024 to the developing world. Let’s equip developing nations with the resources they need to secure their place in a clean energy future. Let’s encourage our government leaders to work across all international venues to open up public and private sector investments for the good of our families, our communities, our countries, and our world.
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