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United States of America

Inflation Reduction Act

legislation type Legislative
Passed in 2022
The Inflation Reduction Act is a wide-ranging document aiming at reducing inflation, improve healthcare across the country, invest in domestic energy production and manufacturing to increase security of supply and jobs while reducing carbon emissions and focusing on disadvantaged communities. One of the main objective of the Act is to lower energy costs while making cleaner technologies affordable, thus also reducing future costs of climate inaction. It further invests through federal support in a wide range of economic sectors to encourage their decarbonisation efforts. It also aims to increase and resilience among rural areas by supporting climate-smart practices for farmlands and forests.

The Act is based on a series of tax credits, grants and subsidies with a $369 billion funding for climate- and energy-related purposes. Prominent incentives contain in the Act aim to boost the U.S. manufacturing and buying of electric vehicles; U.S. manufacturing of solar panels, wind turbines and batteries; carbon-capture solutions; green hydrogen production; forest conservation and wildfire protection; and energy efficiency in affordable housing. The Act also provides for funds for the EPA to enhance compliance monitoring and "support" enhanced reporting of corporate actors regarding greenhouse gases and emissions reduction committments.

The Act contains clauses on environmental justice: 1) on legacy pollution reduction,  2) on affordable and accessible clean energy for disadvantaged communities,  and 3) on better quality of life and good jobs (urban forests, renewable energy, adaptation programs). The bill provides funding to support indigenous communities to address climate change through resilience and adaptation programs, a tribal electrification program, and emergency drought relied. Specific provision is also made to support both rural and coastal communities.


  •  Reduce carbon emissions by roughly 40 percent by 2030 compared to 2005.
    Economy-wide | Base year target | Target year: 2040 | Base year: 2005
from the Grantham Research Institute
from the Grantham Research Institute
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