The Inflation Reduction Act Goes on the Road: Reflections on U.S. Messaging to the World at COP27

The call for developed countries to fund resilience and disaster relief in countries bearing the brunt of climate impacts is clear. At COP27, the U.S. did not have an answer to these calls. Academic institutions are an ideal starting place for conversations about loss and damage, and funding strategies for these funds. While mitigation efforts must continue, a simultaneous conversation on the U.S. role in providing loss and damage must begin in earnest.

By Anna Kelly

This year’s Conference of Parties to the United Nations Framework Convention on Climate Change focused on implementation, loss and damage and adaptation. However, after the first week, it became clear that conversations around loss and damage would steal the show. As a student observer from the University of Michigan, I attended sessions with powerful testimony from leaders and activists from Island Nations that described worsening storms, increasing debt to wealthy countries from loans for adaptation measures, and fears of growing disaster recovery costs.

One climate minister from Saint Lucia, discussing administrative issues of climate finance, said during a panel discussion:

 “It takes between three and five years for us to access funds, and there is a rainy season every year.”

Later in the week, Mia Mottley, President of Barbados, introduced a revolutionary strategy for financing loss and damage through restructuring the World Bank and International Monetary Fund to open up additional grant-based funding measures.

Meanwhile, for the United States delegation, this was truly an ‘implementation COP.’ As a Public Policy Masters student, I have focused on domestic policy and sustainability measures making an impact within the U.S., largely at the state and local level. As such, I attended as many sessions as I could with U.S. representatives at the conference. Throughout all of these sessions, representatives emphasized the major strides in domestic policy that would contribute to reducing GHG emissions in the United States, focusing mostly on the Inflation Reduction Act (IRA).

Signed by President Biden in August 2022, the IRA provides a wide variety of tax incentives, funding opportunities and grants to increase investment in clean and renewable energy sources, increase climate adaptation and resilience measures and shift US industries toward green technologies. By some estimates, the IRA will reduce GHG emissions in the United States by up to 40% by 2030 compared to 2005 baseline levels.

Excitement and pride for this landmark legislation was palpable at all of the sessions I attended with U.S. Representatives. At a session with Ali Zaidi, the National Climate Advisor for the White House, Zaidi touted the bipartisan action on climate represented by the IRA. He described a multilateral stakeholder engagement process, in which workers, organized labor, and environmental justice representatives were included alongside private sector actors to agree on the provisions in the bill. “The president is laser-focused on 100% carbon-free electricity by 2035,” said Zaidi. When asked about questions on loss and damage, Zaidi said that bipartisan support for funding was needed: “We need Republicans to come forward to get things done on climate.” His statements around climate justice also oriented around the IRA and its Justice40 program, in which 40% of the economic benefits of the incentives will be reinvested in the 40% of American communities most impacted by climate change.

At the US Congressional Delegation press conference, the focus was similar. At one point, Richard Neal, the chair of the Ways and Means Committee, said that the IRA was the “most significant offering on climate in the history of the world.” When delegates did discuss international climate policy during the press conference, the emphasis was on the war in Russia and increasing domestic energy production in order to move away from the influence of “petrodictators” like Putin.

Notably, a panel I attended on domestic infrastructure featured Eric Holcomb, the Republican Governor of Indiana. He discussed his strategy as a leader of an industrial state to embrace the incentives presented by the IRA, and described the subnational leadership taking place at the state level in the U.S.. “My state is the future of mobility, manufacturing, and construction,” he said, and went on to describe how that future was the manufacturing of electric vehicles and carbon free steel. This represented a notable shift, that a Republican Governor would so clearly embrace the clean energy economy.  

Finally, Biden’s COP27 speech also focused heavily on progress that would result from the IRA. Rather than participating in the global conversation about loss and damage and climate finance, he discussed the impact of tax breaks, grants and carbon free infrastructure investments on the United State’s GHG emissions. He promoted market side solutions;

“Folks, we are proving that good climate policy is good economic policy. It’s a strong foundation for durable, resilient, inclusive economic growth.  It’s driving progress in the private sector.”

While moments of his speech touched on the call for financing of adaptation initiatives in developing countries, including the establishment of the PREPARE Fund (the Emergency Plan for Adaptation and Resilience) with a $150 million “down payment,” the speech did not include the phrase “loss and damage.”

Don’t get me wrong, this inertia from the U.S. was exciting. The IRA marks a turning point in the clean energy economy in the U.S. Given our position as the second largest emitter of GHG in the world, this transition is needed. But the overall impression left of the U.S. at COP27 was that of a media tour that could have been happening anywhere, not at COP27. In avoiding engagement in conversations around loss and damage, the US was isolated from the most crucial discussions at the conference.

This COP showed the need for academic, political and economic discussions in the U.S. around loss and damages, and what the U.S. owes countries that are already seeing devastating impacts of climate change. The impact of national legislative action on climate in the US should not be ignored, and the IRA is a massive step forward for the US political economy in mitigating climate change. But it is clear that the global conversation is shifting towards adaptation, loss and damage, and climate finance. While progress on mitigation is exciting, the urgency I saw from Island nations and the need for consistent and accessible financing for storm recovery and adaptation measures calls for a new conversation to begin in the US.

This conversation should begin at institutions like the University of Michigan, where students who are planning to enter climate policy in the U.S. can study and debate what is owed to the rest of the world in loss and damages. UofM has just recently joined UC3, the University Climate Change Coalition. This group’s strategic plan does mention environmental justice, but does not discuss loss and damage, climate finance or the group’s perspective on funding adaptation internationally. UofM students should push for larger conversations on campus and in this group about how loss and damage could be structured and funded in the U.S.  

The call for developed countries to fund resilience and disaster relief in countries bearing the brunt of climate impacts is clear. At COP27, the U.S. did not have an answer to these calls. Academic institutions are an ideal starting place for conversations about loss and damage, and funding strategies for these funds. While mitigation efforts must continue, a simultaneous conversation on the U.S. role in providing loss and damage must begin in earnest.

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