Joe Biden's Landmark Climate Bill: Features, Significance & Impact on China - UPSC Notes | Testbook.com

What is Biden's Historic US Climate Legislation?

Inflation Reduction Act (IRA) of 2022:

• The IRA is a significant federal legislation in the United States designed to curb inflation by reducing the deficit, lowering the cost of prescription drugs, and investing in domestic energy production with a particular emphasis on promoting clean energy.
• The legislation earmarks $374 billion for new climate-related expenditures.
• The Act introduces substantial tax credits to stimulate the development of renewable energy projects, including wind and solar energy, as well as electric vehicles .
• The legislation allocates funds for zero-emission technologies to assist disadvantaged low-income and tribal communities. These technologies will help reduce greenhouse gas emissions, enhance climate resilience, and mitigate the risks of extreme heat.

The Effects of the IRA

• The IRA has spurred efforts to reposition the USA as a leading hub for cleantech manufacturing.
• The Act will provide a much-needed boost to the domestic cleantech industries and aid in reducing the US’s dependence on imports.
• The legislation is likely to attract a significant amount of foreign investment to the USA.

The Chinese Perspective:

• The bilateral tension between the US and China has been escalating recently.
• Numerous Chinese firms in the US have recently been hit with multiple sanctions on the basis of national security provisions. This has deterred Chinese cleantech giants from investing in the US.
  • Chinese investors are also apprehensive that they may not be treated equally compared to investors from other nations.
  • They argue that the introduction of the IRA bill alone is insufficient, and that assurances of equal treatment are also required.
• Trade barriers imposed by the USA on Chinese goods are also seen as a deterrent for bilateral trade and investment.