What can the UK learn from the Inflation Reduction Act?

What can the UK learn from the Inflation Reduction Act?

The Inflation Reduction Act is pretty big news. You may not think it, due to its fantastically boring title, not to mention incredibly unhelpful acronym, but it is.

What’s more, ?there’s loads that the UK can learn from it.

First – quick summary – what is it?

The Inflation Reduction Act was a hard fought for flagship piece of Biden’s domestic legislative programme.

The Inflation Reduction Act will kickstart an unparalleled investment of USD 369 billion in climate action to drive down US emissions by 40% against 2005 levels by 2030. This gets the US nearer to its promise of a 50% reduction by 2030. As I said its pretty big stuff!

Up until last month it looked like Senator Minchin and Senator Sinema wouldn’t support it. But by dropping a $14 billion tax increase on wealthy hedge fund managers and private equity executives, and ironically extra drought money to benefit Arizona, ?opposition subsided. ?It’ not a small price to pay for passing such a transformative act of climate leadership, but it’s definitely a reasonable one.

What can the UK learn from this?

Lesson #1 – Use language that will get climate legislation passed

Some members of the US political class are so sceptical of climate change, that any climate change action needs to be shrouded in inflation busting language. UK policy makers can learn a lot from this, when talking about adaptation technology and reducing energy demand , talk about how it will reduce energy costs, and lower inflation. ?For example the Biden administration marketed the act as “reducing prescription drug costs, fighting climate change, closing tax loopholes exploited by big corporations and the wealthy, and reducing the deficit.” It is also designed to position the US as an technology innovator, that can rival China. Again, notice the absence of climate from the Act’s framing.

At the same time, I do believe we need to be pushing society’s Overton window so that people realise that climate breakdown will have far bigger consequences then just recessionary ones. But while this important framing work continues, legislative action is needed now, and we cannot wait until everyone understands this.

Lesson #2 – Talk up the advantages of climate action not just the disadvantages

The Inflation Reduction Act uses incentives like tax breaks and investments rather than cautionary actions like carbon taxes or reduction targets. This was done to largely sate the fear of coal and oil producing districts. ?But it should have a knock-on effect into the real economy where better and accountable sustainable practices will equal better access to investments.

Lesson #3 – Just because something looks impossible it doesn’t mean that it is.

A few months ago, many people though any big US climate legislation was dead in the water. But careful and clever negotiation behind the scenes produce results. This can now be built upon to push even more ambitious laws.

Lesson #4 – Climate and environmental justice cannot be overlooked.

The Act institutes a process for mining communities, and for communities suffering from the impact of pollution to apply for access to funding. Not a perfect example of a just transition process, but symbolically it’s important that it was included, and can be improved.