The IRA requires electric vehicle batteries, wind turbines, and solar panels to be manufactured in the U.S. to be eligible for tax incentives. Taking advantage of the economic opportunities presented by the global energy transition will need new forms of government intervention in the economy according to the IRA. Washington used to focus on public investments in R&D and support for clean energy markets when it came to industrial policies.
Climate change is an economic opportunity that needs to be re-framing. China has a long history of using the state's tools to gain market share. More than 85% of the world's solar modules are made by that nation. 80% of the batteries used in the assembly of battery packs for electric vehicles are produced by it. The EU has used industrial policy to build clean energy sectors and transition domestic industries to a low-carbon future.
The IRA has received a lot of enthusiasm since it was first passed. The White House said it was the most significant climate legislation in US history. It's seen by scientists as a turning point in the battle against climate change. The industrial policy provisions contained in the bill could lead to half a million jobs being created. Since the bill was signed, electric vehicle manufacturers have announced new investments in domestic production facilities.
The US will face challenges in building up its clean energy industries.
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