Reflections on the Inflation Reduction Act of 2022

London Business School’s Ioannis Ioannou provides his thoughts on the largest climate spending package in US history

Inflation Reduction Act 1140 by 346

Over the weekend of the 6th through 7th of August 2022, US senators voted through the night to pass key measures tackling climate change, tax and healthcare.

The climate provisions of the bill are estimated to reduce America’s carbon emissions by about 40 per cent by 2030, compared with 2005 levels. After being passed, the bill will now go to the House of Representatives, which it is also expected to pass.

Writing in the New York Times Letters Page, Ioannis Ioannou, Associate Professor of Strategy and Entrepreneurship, London Business School, gave his own reflections on the bill.

Re “How the New Climate Bill Would Reduce Emissions” (New York Times, Aug. 2):

“You report that analyses have concluded that the climate and energy package “would put the United States much closer to its goal of cutting global warming pollution in half by 2030.”

“It is encouraging to read that calculations from environmental experts judge that despite the provisions for fossil fuels, the bill will be net positive for carbon. This means that the United States is taking a step in the right direction in practical terms, but also in terms of symbolism. Indeed, the U.S. could see itself reinstated as a leading environmentally conscious nation.

“There are now two possible scenarios. The bill may set a precedent for more ambitious bills in the future and a greater understanding of sustainable growth and development. On the other hand, it might become an example of diminished ambition: too much deal making behind closed doors, and watered down commitments. Only time will tell which one of the two worlds will come to be.”

For recent articles and commentary from Dr Ioannou on the important subject of climate change, please click on the following:

The Climate Crisis And The Need To Reimagine Global Institutions

Letter: Anti-woke rhetoric on ESG will harm society

ESG is not a ‘distraction’

How Greenwashing Affects the Bottom Line

Energy Crisis Should Not Force Nations To Sacrifice Green Targets