What the U.S. climate law means for the world

The Inflation Reduction Act is a very big deal for the United States. It’s the biggest climate law in the country’s history. It’s a lot of money, nearly $370 billion, for all kinds of tax incentives for American consumers and businesses. We’ve explained that from several different angles and we’ll continue to explore the package in the coming weeks.

But what does it mean for the rest of the world? That’s what I want to talk about today.

Here’s what the law does, and one thing it doesn’t:

It puts the United States on course to sharply reduce its own pollution, which is good for every living creature on Earth.

The United States is the biggest polluter of planet-warming gases in history. The law does not by itself meet the Biden administration’s ambitious pledge under the Paris agreement, which is to halve the country’s emissions of planet-warming gases by 2030, compared with 2005 levels. But it goes quite a distance: It puts the country on track to reduce emissions by roughly 40 percent within this decade, according to independent analysts.

It’s likely to make renewable energy cheaper worldwide.

The law aims to spur the manufacturing of renewable energy technology in the United States by offering a vast array of subsidies. Because the United States is the world’s largest economy, that is likely to drive down global prices and make it easier for many emerging economies and low-income countries to adopt renewables rather than build more coal-fired power plants.

It keeps the United States in the game in the run-up to international climate talks.

President Trump pulled the United States out of the Paris climate accord. President Biden brought the country back in and made a bold pledge to reduce U.S. emissions. But until the passage of this law, he had no way to get there.

The prime minister of Fiji, Frank Bainimarama, a staunch ally of the United States, praised the law as the “most important show of solidarity to the Pacific since its re-entry to the Paris Agreement.”

“While we still seek even greater ambition from the world’s largest economy and historic emitter, Fiji welcomes this win for the planet,” he wrote on Twitter.

Laurence Tubiana, France’s former chief climate negotiator, described it as essential for America’s reputation in an interview in Le Monde. If the law had not been passed, she said, it would be “hard to see” how the United States could have maintained its credibility.

It signals that democracy can work, albeit messily.

Its passage strengthens the case that President Biden has sought to make to the world: that democracies are better than autocracies at delivering what citizens need, including in a crisis as big and complicated as global warming.

I couldn’t help but notice the diplomatic trolling by the United States’ biggest global rival, China, which is currently the biggest polluter in the world. “Good to hear,” the Chinese Ministry of Foreign Affairs said on Twitter this week. “But what matters is: Can the U.S. deliver?”

That dig came after the U.S. ambassador to China, Nicholas Burns, called on Beijing to “reconsider its suspension of climate cooperation with the U.S.”

China pulled out of bilateral climate talks with the United States after House Speaker Nancy Pelosi went to Taiwan.

It promises to spend a lot of money to pivot away from fossil fuels, but not as much money as China has already spent.

In 2021, China invested roughly $266 billion on what BloombergNEF described as the “energy transition,” including $185 billion on renewable energy alone. By comparison, the United States invested $114 billion on the same items.

It’s hard to say if or when the United States can catch up. The $369 billion that the law promises to invest will be spread out over the next 10 years. It’s also designed to draw more private investment, so the total investment in things like electrifying transportation or developing batteries for energy storage is undoubtedly going to be much larger than $369 billion.

There’s one important thing the law doesn’t do. It doesn’t include money to help poorer countries cope with the effects of global warming.

There are two kinds of money that many low-income countries say they are due.

First, the Paris Agreement contained a promise for rich countries to share $100 billion a year by 2020. That promise still hasn’t been met, according to the Organization for Economic Cooperation and Development.

The Biden administration, for its part, had promised $11.4 billion in annual climate finance by 2024. The latest spending bill passed by Congress allocated barely $1 billion. With midterm elections in early November, Congress may not get around to approving the next spending bill by the time the global climate talks get underway in Egypt in mid-November.

The world’s richest country could show up empty-handed.

“What we’re hearing is ‘This isn’t good enough,’” said Nisha Krishnan of the World Resources Institute. “The U.S. will have a tough time on the finance piece.”

Second, calls have grown louder for rich industrialized nations responsible for historical emissions to pay for the losses suffered by the world’s poor nations. The United States has not agreed to creating such a fund. That’s likely to be a flashpoint at the next climate talks.

The dry West: Arizona and Nevada are facing new limits on the amount of water they can pump out of the Colorado River, and the threat of deeper cuts looms.

China swelters: A two-month heat wave has forced some factories to close, driven up food prices and reduced water and energy supplies.

Dry Europe: A scorching summer has brought water levels in Europe’s rivers and dams to extreme lows, tightening energy supplies and disrupting trade.

North African wildfires: Fast-moving blazes have killed at least 37 people in Algeria.

A defender of mining interests: Harriet Hageman, who defeated Representative Liz Cheney in a primary election, built her career partly by fighting environmental rules.

Fishing for trash and treasure: Pandemic boredom led many to try magnet fishing. Guns and bottle caps have been found, but cleaner rivers are the real payoff.

Tens of millions around the world have been enduring heat wave after heat wave this summer, in what feels like an unrelenting succession of humid days and scorching temperatures. All that hot weather can influence mood and raise the likelihood of more serious mental health issues. Here are key points to keep in mind.

Thanks for reading. We’ll be back on Tuesday.

Manuela Andreoni, Claire O’Neill and Douglas Alteen contributed to Climate Forward.

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