Use Inflation Reduction Act to fight climate change abroad, US told at UNGA

The United States could help finance global efforts to fight climate change by dedicating funds from recent legislation to build up mitigation infrastructure beyond its own shores, though it should avoid any move toward protectionism, a senior European policymaker said Monday.

U.S. President Joe Biden in August signed into law the Inflation Reduction Act, or IRA, a bill that could provide billions of dollars worth of incentives to the private sector and set the world’s largest economy on a path to nearly hit its target of halving carbon emissions by 2050.

Frans Timmermans, vice president at the European Commission, told a gathering at the Clinton Global Initiative in New York that American policymakers must guard against instincts of protectionism that may arise from the bill.

“The IRA is a wonderful thing,” Timmermans said on the sidelines of the United Nations General Assembly. “When it came out, we in Europe, we were sort of dancing on the table saying, ‘okay, now we're on the same track.’ And then we start reading it, there is a risk of protectionism in it as well. And that's what we need to avoid across the Atlantic.”

European policymakers want to make the case to the Biden administration that the IRA funding should be global in outlook and investment, Timmermans suggested.

“We have a collective responsibility on a global level to make sure that what we do here is shared with other countries,” he said.

African countries are responsible for very little carbon emissions but over the last few years have been bearing the brunt of some of the harshest effects of climate change. Storms, persistent droughts, and unpredictable weather patterns, which experts say are due to a changing climate, have displaced millions from their homes and devastated economies on the continent.

A senior official from the African Development Bank told Devex earlier this year that the continent needs $120 billion each year to combat climate change and its effects.

Timmermans said on Monday that it is important that countries avoid the old ways of simply making things and then selling them on to emerging countries. “I want Africa to build its own solar panels, to build its own wind turbines, to have its own green steel,” he said to applause in the crowd. “That should be our commitment to this global development.”

But governments must break old habits of prioritizing local industries in investments, he said.

“I know that's difficult because our industries will say, ‘no, no, it's us first, and then we'll see after that, but we just don't have the time for that. We don't have the time to go through a traditional industrial development,” Timmermans said. “This has to be tackled at a global scale.”

Prime Minister Mia Mottley of Barbados told the crowd at the Clinton Global Initiative that small island nations like hers struggle mightily with the effects of climate change.

“While the United States of America is hit every year with a hurricane, our countries that are small when they are hit, don’t have the capacity to recover easily,” she said. “And that’s the disparity that we see in today’s world.”

Timmermans’ comments echoed sentiments expressed in another panel at the Clinton Global Initiative by Ngozi Okonjo-Iweala, the World Trade Organization director general, who called for a reimagining of globalization, especially in trade.

The global COVID-19 pandemic and its impact on supply chain gridlocks revealed the risks of concentrated manufacturing in specific parts of the world.

“We should be talking about how to deconcentrate these supply chains, using it as a tool to bring in countries or populations who have been at the margin of the global value system,” she told the audience in New York.

“Instead of deglobalization, I want us to talk about reglobalization, using trade, using this unique opportunity, to deconcentrate supply chains globally.”
By spreading the sources of manufacturing, the world will have a more inclusive global economic order and help lift more people out of poverty, she said.

“We'll be bringing in small and medium enterprises, women who are at the margin of trade, that is a way to be inclusive, and to use trade to help improve the poverty situation.”

Timmermans implored his colleagues in the U.S. and Europe to avoid policy mistakes of the past, where countries hoarded solar technology, for example. He advocated for fairer global supply of tools and financing needed to fend off the impact of climate change.

“I think everyone can profit if we do it in that way. But especially the developing world could profit from that,” he said.
Failure to share in future investments could disenfranchise a generation of young people and feed into the politics of cynicism that have spread worldwide, Timmermans said.

“If we don't do that, we give a huge opportunity to the autocrats in the world to tell people that this is all against their interest, that there is an opposition between being pro-climate and pro-social,” he said.

He suggested that Russian President Vladimir Putin is trying to drive a wedge in the global order by exploiting divisions.

“Coming from Europe, I have to tell you this, this is a war not just against Ukraine, it's a war against us all. It's a war against our values,” Timmermans said. “It is linked to the climate crisis. So sharing is the only way forward, sharing with the developing world. And at COP in Egypt should be the first time that we show clearly Europeans, but also Americans, that we are serious about the sharing.”