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illuminem summarizes for you the essential news of the day. Read the full piece on Financial Times or enjoy below:
🗞️ Driving the news: The Inflation Reduction Act (IRA), passed by US President Joe Biden, marks a pivotal shift in global industrial policy
• With $370bn dedicated to decarbonizing the US economy and developing domestic clean technology supply chains, the IRA has made the US a prime destination for cleantech investment, leading to tensions with trading partners like the EU and Canada
🔭 The context: This legislation represents the most significant action the US has taken to reduce emissions
• Its impact is global, triggering a race among industrial nations to maintain competitive edges in the clean energy sector
• This has led to the introduction of similar incentives in other countries to counter the IRA's influence and protect domestic industries.
🌍 Why it matters for the planet: The IRA's focus on domestic manufacturing and clean energy development could significantly alter global supply chains and investment patterns in clean technologies
• However, concerns arise about its long-term viability, competition with imports, and potential impacts on global emission reduction trajectories
⏭️ What's next: Issues like domestic content restrictions, competition with cheaper imports, labor market challenges, and the future of manufacturing post-tax credit expiry raise questions about the long-term impact of the IRA on the clean energy sector
💬 One quote: "How [the IRA] plays out is the thing that keeps us as investors awake at night, because the IRA is a fantastic front-end incentive to get factories built, but it does nothing to keep them solvent for the 30 years." (David Scaysbrook, Co-founder of Quinbrook Infrastructure Partners)
📈 One stat: The IRA has led to a 37% increase in investment in US clean energy in 2023 compared to the previous year
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