Dear Madam or Sir,
While in Europe, due to the seemingly endless war in Ukraine, environmental and energy policy balancing acts have to be mastered, the possibly most spectacular news in favour of climate policy reaches us from the USA.
US Senators Joe Manchin and Chuck Schumer have introduced a long-awaited bill to combat climate change and promote clean energy programmes. The bill has 725 pages and is called the “Inflation Reduction Act of 2022”. While the title points to reducing inflation as the goal of the bill, it would nevertheless be the largest and most aggressive investment Congress has ever made for climate action, with a planned $369 billion, and includes provisions to reduce US emissions by about 40% by 2030.
Lawmakers, climate change advocates and environmentalists, who had attacked Senator Manchin for his previous opposition to climate action, were thrilled by the surprise announcement. In fact, it would be a big win for the clean energy transition – providing financial incentives and tax credits for everything from manufacturing clean energy products and buying clean vehicles as well as promoting clean sources of electricity. President Joe Biden said the tax credits and investments in clean energy projects will create thousands of new jobs and help lower energy costs. That is why he urged the Senate to pass the bill as soon as possible. The Senate will vote on the climate change bill next week. Afterwards, it will be passed on to the Democrat-dominated State House.
Prices for European emission allowances have recovered a little from the previous week’s decline and found their way back to the 80-euro mark, especially on Thursday and Friday. Analysts continue to expect at least moderately higher prices, as the increased burning of coal as well as EU market reforms will offset the effects of the recent agreement on reducing the use of gas and because emissions from the power sector will also rise above the 2021 level. This fits with the news from several European utilities, which confirmed in their half-year results an increase in their fossil power generation covered by the EU ETS. Among other reasons, they cited declining hydropower production due to drought-like conditions on the Iberian Peninsula.
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