As the US federal government’s most significant action ever on clean energy and climate mitigation, the Inflation Reduction Act opens up significant opportunities for a new era of climate investment.
As the 78th United Nations General Assembly and New York Climate Week 2023 were in full swing, C40 and CDP convened more than 40 mayors, senior government leaders, financial institutions, non-profits and companies to discuss the implementation of the Inflation Reduction Act with Laurel Blatchford, the US Department of the Treasury’s Chief Implementation Officer for the act. The discussion provided critical insight into the opportunities for cross-sectoral partnerships created by the Inflation Reduction Act and identified operational challenges different actors are working to address to bring projects to fruition.
The act includes more than US$369 billion, split between new direct spending, incentives for private investment, bonus incentives and tax credits. The Inflation Reduction Act could provide much needed investment in school districts, cities, states and public authorities, as well as help to create quality jobs and achieve multiple equity, environmental and justice goals. Through the Elective Pay policy and Low-income Communities bonus credit, the act has opened critical clean energy project financing by making tax credits available to organisations and cities for the first time.
Leaders from the public, financial, industry and nonprofit sectors agreed that the potential for impact is enormous. Nonetheless, there are many ways different actors in the system must work together in novel ways to take full advantage. If implemented successfully, the Inflation Reduction Act can increase social and economic benefits for historically marginalised communities, which are disproportionately impacted by the climate crisis. To do so will require breaking down barriers between local governments, community development finance institutions, capital providers, businesses and community interests.
The full article, including key takeaways from the discussion, can be found on the CDP website.