A major milestone in the climate war

After almost 18 months of haggling, on Aug 6, the narrowly divided US Senate passed the so-called "Inflation Reduction Act" (IRA), which is the single biggest climate action initiative in history. Of the Act's total outlay of US$433 billion (S$593 billion), more than 85 per cent, or US$369 billion, will be directed towards enhancing and creating incentives to produce wind, solar and other renewable energies and invest in green technologies. It will also subsidise the adoption of electric vehicles and energy-efficient heating and cooling systems by consumers and businesses.

The IRA is smaller in scope than the original "Build Back Better" initiative proposed by US President Joe Biden in 2020, from which it is derived. As a concession to Democratic Senator Joe Manchin, who had blocked the previous plan, it also contains support for the fossil fuels industry - although this includes incentives for carbon capture. Nevertheless, the IRA is expected to reduce US greenhouse gas emissions to 40 per cent below their 2005 levels by 2030 and has been broadly welcomed by climate activists.