NEW YORK: The US climate law will spur a wave of clean energy development and new technology critical to constraining global warming, intensifying the pressure for Europe to keep pace, the head of the International Energy Agency says.
“We are entering a new industrial age – an age of clean energy technology manufacturing,” Fatih Birol said at an event hosted by the Council on Foreign Relations in New York.
Although China is now “by far the leader” in that manufacturing race, the United States wants to compete with the Inflation Reduction Act (IRA).
This is unlocking as-yet-underappreciated benefits for global markets and technology development, Birol said.
Billions worth of clean energy incentives in the law enacted last year are already spurring global competition.
This is as other nations seek to bolster domestic manufacturing of electric vehicles, renewable power gear and other advanced technology critical to curtailing greenhouse gas emissions.
The European Union has pledged as much as 300bil euros (US$326bil or RM1.38 trillion) to counter the IRA incentives.
The IRA is the largest investment in greenhouse gas reductions to date.
Passed in August, the IRA includes tax credits for heat pumps, heat pump water heaters, solar and others.
Funding will also provide direct-pay rebates for an even broader set of electrical upgrades in the future.
Given the high energy costs and demands of Europe’s current industrial base – and the need to compete with the United States and China – the bloc needs to adopt a new approach, Birol said.
“Europe has to come up with a master plan for a new industrial strategy,” Birol said.
He added that he has pressed the issue with European leaders.
Birol separately admonished clean energy champions who oppose carbon capture and nuclear power, arguing those and other technologies will be critical to keeping the earth’s temperature rise in check.
Critics who don’t see them “as part of the solution are really underestimating the order of magnitude of the challenge we have,” Birol said.
He added that there was still “a need for innovation.” — Bloomberg