The Inflation Reduction Act, signed into law by President Biden in August of 2022, is the largest climate legislation in US history.
Just Energy Transition Partnerships:
The Answer to Phasing Out Coal?
The Inflation Reduction Act:
Centered on Sustainability
Sources: Atlantic Council, BakerAvenue
The Inflation Reduction Act is intended to help companies address climate change, increase investments in renewable energy, and enhance energy efficiency through tax credits and other incentives.
Notably, the Inflation Reduction Act is expected to advance decarbonization through the following:
1. Increasing demand for electric vehicles, low-carbon materials / construction, and clean technologies
2. Expanding growth of renewable energy through tax credit extensions and increases in funding
3. Encouraging innovation through research and development of clean technology and low-carbon materials
4. Generating demand for low-carbon products in construction of federal buildings and transportation projects
The law further defines the path to a more environmentally friendly future, while presenting new opportunities for companies across industries to deliver on sustainability and carbon-reduction efforts in every aspect of business.
Sources: PwC, BakerAvenue
Just Energy Transition Partnerships (JETPs) are set to play an important role in financing the energy transitions of emerging economies, and accelerating the phase-out of coal-fired power plants to drastically reduce global coal emissions.
Read more on industry implications and what the C-suite should be thinking about: The Inflation Reduction Act and Your Business
If JETPs prove successful in delivering climate finance, it may be worth exploring how the “country platform” approach can be applied to additional sectors to provide long-term value beyond the decommissioning of coal. JETPs approach decarbonization from a system-wide perspective, with an understanding of the overlap of issues, such as infrastructure development, finance, and social displacement. If JETPs can facilitate the initial phase-out of coal-fired power plants, it may be plausible to apply a similar decarbonization method to other sectors, including transport and energy-intensive industries, while allowing for further engagement with other emerging economies.
JETPs: Climate-Financial Agreements With Three Goals
Read more on the increasing optimism and key challenges: Just Energy Transtion Partnerships: Will COP27 Deliver for Emerging Economies?