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The US Senate votes the Inflation Reduction Act to fight climate change

The US Senate has passed the Inflation Reduction Act of 2022, which includes US$369bn in energy security and climate change programs over the next ten years. The combined investments in the bill could put the country on a path to roughly 40% greenhouse gas (GHG) emissions reduction by 2030 from 2005 levels. The bill would now be sent to the House of Representatives, where it should be approved by the end of the week. The text will be then signed into law by the White House.

The bill would provide tax credits and grants to reduce emissions from electricity production, transportation, industrial manufacturing, buildings, and agriculture. This comprises US$30bn in targeted grant and loan program for state and electric utilities to accelerate the transition to clean electricity, a US$27bn clean technology accelerator to support the deployment of technologies to reduce emissions and a methane emissions reduction program to reduce the leaks from the production and distribution of natural gas. The bill has also US$60bn of incentives to bring clean energy manufacturing into the country, including production tax credits to accelerate US manufacturing of solar panels, wind turbines, batteries, and critical minerals processing. The bill would also require the Department of the Interior to reinstate oil drilling in the Gulf of Mexico. In addition, the bill would provide a range of incentives to customers to relieve the high costs of energy and decrease utility bills. This includes direct consumer incentives to buy energy-efficient and electric appliances, clean vehicles, and rooftop-solar, and invest in home energy efficiency.

In April 2021, the government pledged to reduce the country’s GHG emissions by 50-52% below 2005 levels by 2030. The United States also targets carbon neutrality by 2050. US GHG emissions (including LULUCF) declined by 11% in 2020 to 5,222 MtCO2eq, i.e., 21% below 2005 levels, according to the US EPA (Environmental Protection Agency). This was driven by an 11% decrease in CO2 emissions from fossil fuel combustion, primarily due to a 13% drop in transportation emissions driven by lower demand owing to the COVID-19 pandemic. In addition, power sector emissions also fell by 10%, reflecting both a slight decline in demand due to the COVID-19 pandemic and a continued shift from coal to natural gas and renewables.

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