The article titled “The US Inflation Reduction Act: Is it a Green Deal?” published by Sciences Po’s European Chair for Sustainable Development and Climate Transition on March 25, 2025, critically examines whether the U.S. Inflation Reduction Act (IRA) qualifies as a comprehensive Green Deal, akin to the European Green Deal (EGD). (Sciences Po)
Key Insights
- Ambitious Climate Investment: The IRA allocates nearly $400 billion toward climate change mitigation through a combination of loans, grants, and tax incentives aimed at clean electricity, energy transmission, manufacturing, and transportation sectors.
- Incentivizing Private Sector Participation: Over half of the IRA’s projected funds are distributed via transferable tax credits, primarily benefiting corporations, to stimulate private investment in key areas of the energy transition.
- Emission Reduction Goals: While the IRA does not set formal mandated targets, it is expected to reduce U.S. greenhouse gas emissions by 43% to 48% by 2035, potentially doubling the current rate of emissions reduction and moving the U.S. closer to its 2050 carbon neutrality pledge. (Sciences Po)
- Comparison with the European Green Deal: The article assesses the IRA against the EGD, which employs a multifaceted approach including regulation, tax policy, direct investment, and international trade to address the energy transition, decarbonization of the non-energy economy, development of new green industries, and biodiversity and agricultural policies.
Conclusion
The analysis concludes that, despite its significant financial commitment to climate initiatives, the IRA lacks the comprehensive regulatory framework and sectoral breadth characteristic of the European Green Deal. Therefore, while the IRA represents a substantial step toward U.S. climate action, it does not fully embody the holistic approach of a Green Deal.
Ultimately, the IRA does not commit much public money directly to the investment in a future green economy, preferring indirect investment through tax breaks, which defer investment decisions to the private sector.
For a more detailed examination, you can access the full article here: (Sciences Po).
