The Inflation Reduction Act (IRA), signed into law by President Joe Biden in 2022, represents a landmark investment in the American economy, focusing on climate change, healthcare, and taxation. With President-elect Donald Trump set to take office on January 20, 2025, there are growing concerns about the future of the IRA. Trump has publicly criticized the IRA, labeling it 'the Green New Scam' and has promised to scale back or eliminate key provisions of the legislation [49fbd1f6].
The IRA allocated at least $370 billion for climate action, aiming to reduce US emissions by 40% by 2030, and has significantly influenced global climate finance, particularly in Asia, where the region requires $1.1 trillion annually for climate mitigation and adaptation. Following the IRA's announcement, investment funds experienced a remarkable 100% increase in inflows, resulting in an additional $1.4 billion in investments [46eda605].
Nearly half of the IRA's funding for manufacturing electric cars and renewable energy products is directed towards seven states crucial for Trump's electoral success: Arizona, Georgia, North Carolina, Nevada, Wisconsin, Michigan, and Pennsylvania. This allocation raises questions about whether parts of the IRA may be preserved due to its bipartisan appeal and existing commitments [49fbd1f6].
In 2023, despite challenges in the climate-focused investment landscape, global assets in climate funds rose by 16% to $540 billion, with Europe accounting for 84% of these assets. The IRA has also allowed Medicare to negotiate drug prices, saving nearly 1.5 million people almost $1 billion in the first half of 2024. Experts warn that scaling back the IRA could lead to $600 billion in reduced federal spending through 2033, potentially resulting in negative economic consequences globally [ee1a7b4d][49fbd1f6].
Industry insiders express cautious optimism that some aspects of the IRA may be preserved, as the act encompasses multiple government agencies, including the Department of Energy and the Environmental Protection Agency, which may resist drastic cuts [49fbd1f6].