Game of Straws

Welcome to the Strawman, the newsletter that should be sponsored by McDonald’s because badadadada - you’re lovin’ it.

This week, we're talking about the Inflation Reduction Act (IRA) in the US and the knock on effects its having - especially in the UK and EU. I don’t wanna make too big a deal out of this, but in the Game of Straws™️, the USA has made a run for the throne.

What is the IRA?

Land of the free. Home of the brave. And now? Country of the electric vehicles. Or so the US is hoping to become, after this act. See, the Inflation Reduction Act, like most governmental things with acronyms, is horribly mislabeled. With $500bn in spending and tax breaks announced, $400bn of this is focused on clean energy.

Most of this is focused on corporates, but there’s also a chunky $43bn in there for consumers - including up to $7,500 off on your next electric car for US citizens. Makes you proud to be American.

Slightly less exciting but potentially more important are the corporate incentives - by making it more attractive for companies to build in the US, they’re hoping to on-shore important assets. All those companies have to come from somewhere though.

In the business of doing business

This increased competitiveness from the US puts pressure on other countries to maintain their businesses incentives and prevent them from moving to ahem greener pastures. In this global race to retain businesses, the IRA has unwittingly spurred countries to take more robust climate action, ultimately benefiting the environment and the global economy.

Take the UK and Europe for example. I’m not one to spread rumours, but a little birdie told me they’ve not been on the best of terms since their divorce. In a surprising turn of events, the IRA has brought the UK and EU closer together in their climate change efforts. United by a common goal, they’re now considering coordinated moves on a new carbon border tax and linking their carbon pricing systems. Rishi Sunak has even signalled potential cooperation with the EU on more green initiatives - who said you can’t stay friends with your ex?

Speaking of staying friends with your ex - you should probably send this newsletter to them with no context. If you end up getting back together, you can thank the Strawman.

See ya tomorrow!