Senate Democrats appear close to passing a significant portion of President Biden’s domestic agenda after announcements that both Joe Manchin of West Virginia and Kyrsten Sinema of Arizona will support the Inflation Reduction Act. The legislation stands at a critical junction in the global effort to combat climate change, containing United States’s largest ever fiscal commitment to addressing the global environmental crisis. Alongside its climate measures, the Act also expands subsidies in the Affordable Care Act and finances deficit reduction, policies funded by imposing a 15% minimum corporate tax rate on companies whose annual revenue exceeds $1 billion US dollars. 

The analysis released by senate majority leader Chuck Schumer claimed the bill would reduce US emissions by as much as 40% by 2030. It includes $369 billion to address climate change, with programs to incentivize the purchase and use of electric vehicles, $30 billion in tax credits for the production of solar and wind energy and a further $60 billion in tax credits for clean energy manufacturing. In spite of its name, economists remain divided over the likelihood the bill will reduce inflation, with some suggesting it may instead slightly aggravate the current economic crisis. 

In a bipartisan letter obtained by Axios, five former Treasury secretaries who served under Presidents Clinton, Bush and Obama offered their strong support for the bill, writing “this legislation will help increase American competitiveness, address our climate crisis, lower costs for families, and fight inflation — and should be passed immediately by Congress”. 

In a statement released on the 4th of August, President Biden called the proposed deal the “largest investment in history in combatting climate change and increasing energy security”, while identifying it as a “critical step toward reducing inflation”. Speaking to Nature, Dan Lashof of the World Resources Institute identified that the bill “will have a tremendous impact on innovation and cost reductions for a whole set of clean-energy solutions that the world needs to reach its climate goals”. 

In a message posted on Twitter, former Vice President and climate activist Al Gore wrote, “The Inflation Reduction Act has the potential to be a historic turning point. It represents the single largest investment in climate solutions [and] environmental justice in US history. Decades of tireless work by climate advocates across the country led to this moment”. The broad consensus among leading Democratic figures and respected voices from both business and academia emphasizes the significance of the Act and its potential to revitalize global efforts to meet climate targets.

The legislation comes amid a tumultuous period for the United States. Only last month, the Supreme Court ruled that the Environmental Protection Agency could not use existing powers to eliminate fossil fuel power, significantly inhibiting the President’s capacity to reach accepted climate targets. Meanwhile, rapidly rising inflation and a corresponding increase in fuel prices across the US have resulted in calls to expand fossil fuel production. 

The legislation is vital to international efforts to keep global temperature increases below 1.5 degrees. Its passage, however, has a broader symbolic significance, reframing the United States as a leader in environmental action while reflecting a renewed hope in the capacity for significant and enduring climate action. The bill’s bifurcated focus on eliminating emissions while reducing inflation has the capacity to improve the lives and livelihoods of people across the globe, paving the way for a more comprehensive and more sustainable economic recovery. 

By remaining committed to environmental action, deficit reduction and inflation management, the US position itself for a generation of development that is more stable and more prosperous both domestically and around the globe.