Commentary
The $369 billion plan of climate and energy spending in the Inflation Reduction Act is highly likely to heighten Inflation, at least in the medium term, which goes against the original intention of the Reduced Inflation Act.
President Joe Biden signed the Inflation Reduction Act on Aug. 16, 2022, which contains a $369 billion investment scheme in energy security and climate change, the single biggest climate investment in U.S. history. It includes tax credits and incentives for renewable energy projects, which will boost the investment of renewable energy and accelerate the energy transition.
However, a rapid energy transition from fossil fuel to renewable resources will not only drive up the prices of both metals and minerals that are essential to solar panels, wind turbines, and electric vehicles, but also put upward pressure on fossil fuels prices, a key contributing factor to the headline inflation, owing to a strong demand and tight global supply….