Background

Biggest climate bill in U.S. history: Signed into law by President Biden in August 2022, the $750 billion bill is a milestone in U.S. efforts to combat climate change
Focuses on subsidizing clean energy and market incentives for reducing emissions
Part of a massive suite of legislation that also includes the CHIPS and Science Act

Key Points

Most aggressive climate investment in U.S. history: Largest-ever fiscal package to promote clean energy production and manufacturing, reduce carbon emissions, provide energy security, and combat the climate crisis
Includes various financial incentives for corporations and consumers, i.e. investment tax credits, clean fuel production credits, and manufacturing credits for solar and wind components
Projected to cut carbon emissions by approximately 40% by 2030

Medicare now able to negotiate prices for high-cost medicines, and lower out-of-pocket costs for Medicare recipients
Extends the expanded Affordable Care Act program until 2025

Energy Tax Provisions Incentives and Requirements

Provides several tax credits for corporations that turn their focus towards carbon sequestration, electric vehicle production, renewable energy investments, and other green transition initiatives
To fully redeem tax credits, companies must conform to new requirements pertaining to:

1) wages and apprenticeships

2) domestic content, and

3) other targeted credit enhancements

Unlike privately purchased vehicles, commercial fleets are not subject to the above-mentioned requirements

Impact on the U.S. Economy

According to the nonpartisan Congressional Budget Office (CBO), the law will have negligible impact on inflation through 2023, and while it will affect economic activity and inflation beyond 2023, CBO did not evaluate those effects.
CBO estimates the bill will decrease the U.S. deficit by more than $100 billion over the next 10 years. A letter to the White House, signed by more than 120 economists, highlights the law's positive impact on the budget deficit and notes that the bill will help to decrease inflation through its reduction of the debt.

Impact on Businesses in Europe

Given the size of the U.S. economy and the amount of carbon emissions, the bill is an essential step toward stronger global cooperation on climate change
On March 10, the U.S. and EU announced that both parties seek to address the climate crisis, accelerate the global clean energy economy, and build resilient, secure, and diversified clean energy supply chains and to:

promote innovation that drives down costs for clean energy technologies in the global market

EU-U.S. Task Force on the Inflation Reduction Act will continue to help develop a transatlantic approach to strengthen and secure supply chains, manufacturing, and innovation
Addressing EU concerns over perceived U.S. economic nationalism — Negotiations are underway on a targeted critical minerals agreement for the purpose of enabling relevant critical minerals extracted or processed in the EU to count toward requirements for clean vehicles in the Act

The Role of AmChams

Support the competitiveness of transatlantic businesses in the global economy
Provide a platform for exchange and knowledge-sharing
Highlight the importance of constructive dialogue and transatlantic alignment on climate action

Download our policy memo and fact sheet on the Inflation Reduction Act here.