IRA - Climate champion USA?

America could overtake Europe with Inflation Reduction Act (IRA)

In Europe, there is a widespread belief that decisive climate policy will simultaneously bring about an economic miracle. People feel superior to the United States in terms of climate policy. After all, the U.S. had rejected the Kyoto Agreement and, under President Donald Trump, pulled out of the Paris Climate Agreement in 2020. While Europe acknowledges the leading role of the United States in the military and in the digital sector, it believes it is ahead in renewable energies, electromobility and heat pumps. In the meantime, however, Brussels and the European capitals are beginning to understand that this European leadership, which they thought was secure, is being seriously challenged by the forces unleashed by the Inflation Reduction Act (IRA).

Climate policy, until recently a stepchild of American politics, is suddenly becoming the focus of power politics and economic interests. Yet limiting global warming is by no means the Americans' real goal. Rather, the IRA is about strengthening the American middle class and reindustrialization. And it is about national security, the strength of the U.S. in the rivalry of the great powers. As a means to that end, Washington is relying on climate policy and climate technology. In Europe, the thinking is the other way around: climate policy is the real goal, and it is hoped that this will also bring economic progress.

With the IRA, the United States is strengthening its economic power and, at the same time, is preparing to become the world's No. 1 in terms of climate policy as well. The IRA could one day go down in the history of the 21st century as one of the most important legislative packages.

How is the EU responding to this challenge? Can the Green Deal or the Net Zero Industrial Act keep Europe on an equal footing - or will the "Old World" now also be "left behind" in terms of climate policy? Is there perhaps even a chance that the ongoing negotiations between Brussels and Washington will produce a common transatlantic energy and climate policy? Perhaps. From today's perspective, however, there is a danger that the European Green Deal and the associated laws, regulations and subsidies in the EU and its nation states will not be able to keep up with the unleashing of economic and climate policy forces in the United States. Equally problematic, however, is that it is not adequately seen or downplayed by European leaders.