The United States of America’s bilateral relations with China have been a topic of discussion for several years. However, amidst the increasing tension, President Joe Biden’s landmark climate bill has come as a ray of hope for clean energy investors in China.

    What is the Landmark US Climate Bill?

    The Inflation Reduction Act (IRA) of 2022 is a significant federal law in the United States that aims to reduce inflation. It seeks to achieve this by decreasing the deficit, decreasing the cost of prescription drugs, and investing in domestic energy production with a focus on promoting clean energy. The bill includes a package worth $374 billion in new climate-related spending.

    The following are some of the features of the IRA:

    1. Tax Incentives: The IRA bill includes substantial incentives in the form of tax credits to encourage the development of renewable energy. These incentives will support wind and solar projects, as well as electric vehicles. Such initiatives will boost the cleantech industry in the United States and reduce the country’s reliance on imports.
    2. Zero-Emission Technologies: The bill provides funding for zero-emission technologies to help disadvantaged low-income and tribal communities. These technologies will help reduce greenhouse gas emissions, increase climate resilience, and minimize the dangers of extreme heat.
    Impact of IRA

    The Inflation Reduction Act has the following impact:

    1. Boost for Cleantech Manufacturing: The IRA bill has given a push for re-establishing the USA as a cleantech manufacturing hub. With the significant incentives provided, domestic cleantech industries will receive the necessary boost.
    2. Reduced Dependence on Imports :The bill will help reduce the US’s reliance on imports and make the country self-sufficient in terms of energy production.
    3. Attract Foreign Investment:The IRA bill is also expected to attract a substantial amount of foreign investment in the United States. However, the Chinese cleantech giants are reluctant to invest in the United States due to the current bilateral tensions.
    Chinese Angle

    China is the world’s largest carbon emitter, and the country has been under immense pressure to reduce its emissions. The Chinese government has taken several initiatives to promote clean energy in the country. However, the recent bilateral tension between the US and China has impacted Chinese investors’ decision to invest in the United States. The following are some of the concerns of Chinese investors:

    1. Sanctions: Recently, many Chinese firms in the US were at the receiving end of multiple sanctions on the ground of national security clauses. This has discouraged Chinese cleantech giants from investing in the United States.
    2. Equal Treatment: Chinese investors fear that they may not receive the same treatment as investors from other countries. Therefore, they demand assurance of equal treatment from the US government.
    3. Trade Barriers: The trade barriers imposed by the United States on Chinese goods are also not a good sign for bilateral trade and investment.
    Impacts of the Inflation Reduction Act (IRA) of 2022
    Courtesy:Indian Express
    Why In News

    Amid the increasing bilateral tension between the US and China, Joe Biden’s landmark climate bill is expected to attract Chinese clean energy investors. The bill’s substantial incentives, including tax credits and funding for zero-emission technologies, offer a significant opportunity for China’s cleantech giants to invest in the US and contribute towards combating climate change.

    MCQs about Impacts of the Inflation Reduction Act (IRA) of 2022

    1. What is the main objective of the Inflation Reduction Act (IRA) of 2022?
      A. To reduce inflation by decreasing the deficit and cost of prescription drugs.
      B. To increase the deficit and cost of prescription drugs.
      C. To invest in foreign energy production.
      D. To reduce investment in clean energy.
      Correct Answer: A. To reduce inflation by decreasing the deficit and cost of prescription drugs. Explanation: The IRA is a significant federal law in the US that seeks to reduce inflation by decreasing the deficit, decreasing the cost of prescription drugs, and investing in domestic energy production with a focus on promoting clean energy.
    2. What is the significance of the IRA for the US cleantech industry?
      A. It will help in reducing the US’s reliance on imports and attracting foreign investment.
      B. It will increase the US’s dependence on imports and decrease foreign investment.
      C. It will only benefit a few US cleantech companies.
      D. It has no impact on the US cleantech industry.
      Correct Answer: A. It will help in reducing the US’s reliance on imports and attracting foreign investment.
      Explanation: The IRA will provide a boost to domestic cleantech industries and will help in reducing US’s reliance on imports. It will also help the USA in attracting a substantial amount of foreign investment.
    3. What is the impact of the IRA on disadvantaged communities in the US?
      A. It offers funding for zero-emission technologies to help disadvantaged low-income and tribal communities.
      B. It only focuses on supporting wealthy communities.
      C. It increases the greenhouse gas emissions of low-income communities.
      D. It has no impact on disadvantaged communities in the US.
      Correct Answer: A. It offers funding for zero-emission technologies to help disadvantaged low-income and tribal communities.
      Explanation: The IRA offers funding for zero-emission technologies to help disadvantaged low-income and tribal communities. These technologies will aid in reducing greenhouse gas emissions, increasing climate resilience, and minimizing the dangers of extreme heat.
    4. Why are Chinese clean energy investors hesitant to invest in the US?
      A. They fear that they may not receive the same treatment as investors from other countries.
      B. They are not interested in investing in the US cleantech industry.
      C. They do not have sufficient funds to invest in the US.
      D. They are not aware of the US’s cleantech policies.
      Correct Answer: A. They fear that they may not receive the same treatment as investors from other countries.
      Explanation: Many Chinese firms in the US were at the receiving end of multiple sanctions on the ground of national security clauses. This discourages the Chinese cleantech giants from investing in the US. Chinese investors also fear that they may not receive the same treatment as investors from other countries.

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