The bill I'm about to sign
is not just about today. It's about tomorrow. It's about delivering
progress and prosperity to American families. The Inflation Reduction Act
was the largest investment in clean energy in the
history of the world. The Inflation Reduction Act
is going to rapidly accelerate our pathway to net zero. A sweeping piece
of legislation that is designed to decarbonise
the US economy, to reshore supply
chains, and also to break dependence on China. It levels the playing field
for western producers. It's the largest
investment in the history of the United States'
solar industry of any kind. The so-called Paris Climate
Accord - it's a disaster, a death sentence. It's possible that you
could see, in 2024, a re-election of Donald Trump. And at that point, I think
all bets would be off. The big question is whether
this ends up being a trade war. We thought we were in the era
of free-market globalisation. And now we're not. The Inflation Reduction Act is
actually a very misleading name because it has very little to
do with inflation reduction, particularly in the short term. It's a piece of
industrial policy. It's a piece of climate policy. It's a piece of trade policy. It's not a piece of
inflation reduction. It's full of tax
credits designed to draw in investment
into the US economy. And it's all being funded
by the federal government over the next 10 years. The IRA includes $370bn worth of
tax credits, loans, and grants to incentivise
domestic manufacturing. The Biden administration
says, you know what? It is important that
America makes things. It is important not
only that we transition to a greener economy,
but it's important to be able to secure supply chains. This is a big shift. This is about a
50-year change in how the economy is going to run. Is this actually going to create
long-term viable industries which are more competitive
than the Chinese? We have to face the
risk that it won't work. And when the subsidies stop,
unless they're there forever, the programme won't
really have worked. And some of these may turn
out to be white elephants. I'm John Podesta. I am overseeing
the implementation of the clean-energy provisions
of the Inflation Reduction Act, the largest
investment in clean energy and attacking the
problem of climate change in the history of the world. The impact on emissions of the
IRA are expected to be about 40 per cent cut by 2032 if all
the tax credits are taken up. At the heart of it was
an economic theory. Invest in American
technology and manufacturing, power the economy,
reduce the dependency the United States had on
unreliable single-source suppliers of certain
goods and materials. The Chips and Science
Act passed first. It's a much smaller
industrial policy. It includes around $52bn
to incentivise research in semiconductors
as well as stimulate semiconductor production
in the United States. It's really, in a way, a
partner bit of legislation. It's also about
reshoring supply chains. According to FT research,
the IRA and the Chips Act together have helped
stimulate more than $220bn in manufacturing and
clean technologies and semiconductors. This will create more than
a hundred thousand jobs. It's clearly designed to tell
the world that America is back as a major player
in world industry and in the climate fight. Sleepy old America is gone. We've already seen over
$115bn of investment in clean manufacturing,
over $125bn in utility-scale
renewable energy. So you have Arizona
that's sucking in money from the Inflation
Reduction and the Chips Act, the Midwest states
like Ohio, Michigan - upstate New York is
taking advantage of this. In the southeast,
Georgia - the states that may have been once
resistant to clean energy and so on for political reasons. I think what you're
seeing in Georgia is a bipartisan embrace of the
opportunities and investments in advanced energy manufacturing
and electric vehicle manufacturing that
are being supercharged by these manufacturing and
infrastructure policies. We made the initial investment
in the United States in 2018. And we're making a
much larger expansion after passage of the
Inflation Reduction Act. It's about a $2.5bn investment. By the end of next
year we're going to collectively employ
about 4,000 people directly, across the state. It's the largest investment
in the history of the United States solar
industry of any kind. We've worked really closely with
folks in Georgia and Washington DC over the last five years. The solar
manufacturing policies, alongside this broad package
of manufacturing incentives, are designed to make Georgia
the national and global leader in advanced-energy
innovation and manufacturing. Solar technology
and solar products are strategic commodities, poly
silicon, ingots, wafers, cells, but a significant
stranglehold, historically, on the market in China. Our energy security,
our energy independence, and our environmental
future depend upon our production
of these technologies to components in
the United States. Solar panels that we
make here at this factory are used for both
commercial and residential. Now you're going to see
where the magic happens. I started my career
in manufacturing because I knew I wanted to
follow in my parents footsteps, went into textiles-- ladies undergarments. Georgia was not known for
advanced manufacturing. Our facility here has
transformed the job market. We're keeping students. When they're coming
out of school and they're coming to work,
they're buying homes here. We want to see the entire
supply chain for our product here in Georgia. Products that come
out of this facility will contain cells,
wafers, and poly silicon that all originated
in the United States. A state like Georgia
has lots of land. Its labour is relatively cheap. Its governor has
been very progressive in terms of offering
subsidies on top of the ones that come with the
federal Inflation Reduction Act. And developers are arriving
in what people are now calling the battery belt in the south. You have Norway's FREYR
announcing a $2.6bn factory in Georgia, creating
more than 700 jobs. The production-tax
credits in the IRA levels the playing field for
western producers. The hope is that through the
10 years of the IRA programme, scale has been developed,
supply chains get developed. Then western producers
can compete one on one with the Chinese producers
from that point forward. So our initial project
in Georgia, in the US, is called Giga America. We have a site south of Atlanta. The amount of investment will
be roughly $2.5bn to $3bn, could go up to around
$4.5bn to $5bn. Critics, especially
outside the US, have called the Inflation
Reduction Act and the Chips Act a new form of protectionism,
an extension of what Donald Trump was doing. From this day forward it's
going to be only America First. The US is undergoing
a bipartisan shift, bringing into America
industries in which China is or potentially
will be dominant. Biden is doing it
through subsidies. Trump did it through tariffs. Now you see companies
like General Electric, an American company that
absolutely embodied the idea that you could build
things more cheaply abroad and then sell them
back to Americans. It offshored as
much as it could. Now GE is building a new factory
in Schenectady, New York. Schenectady, New
York, represents a lot of the legacy
of General Electric. It's where Edison
founded the company. , We're investing $50mn. We're adding 200
union jobs to create what will be the largest
onshore wind-and-cell facility in the US. I would like to think that
you know they would have picked Schenectady anyways. But probably not. I know the IRA has
been a big part of it. So we're in upstate New York. We're probably not the lowest
labour rate in the world. It is very good work for
the existing skill set that we have, and to bring
in all this new blood that can then learn from people
who've been building generators and turbines for 30 years. General Electric is
an important employer for the Schenectady
area, and frankly, depending on what chapter, over
the last 20 years, one in which we've been reducing
jobs, not adding jobs. I'm actually a third-generation
GE Schenectady employee. My grandfather started here in
1952 and retired in the '70s. My father retired after
40 years service in 2010. I worked down the
hall with somebody who has five generations. Most of the people in here
have a relative who've worked in General Electric. If they're from Schenectady,
you know somebody who worked for GE at some point. Schenectady peaked, maybe
back in the '60s and '70s, with 40,000 people here. There's still 5,000-plus people
on the Schenectady campus. This is by far the
biggest investment that I've been a part
of in my 26 years here. Factories like to know that
there's work in front of them and that they're going to
be here for a long time to be sustainable. And to have the business
have enough confidence that Schenectady can do this,
that we're the right place to put it, is just huge. Developers are listening. They understand that because
of these tax credits, they can actually
thrive in the US. They can make the profits there. It will have an impact
on global trade. It does look protectionist. It is clearly designed to shift
production from foreign places to America. And that's ultimately
what a lot of protection is designed to do. Some of the architects
of globalisation, for example, John
Podesta, who is now President Biden's official
in charge of the Inflation Reduction Act, he was part of
the Clinton administration, opening global markets, and
then was part of the Obama administration
that did the same, 30 years of American
economic policy heading in one direction. Now American policy is
about re-industrialising its heartlands even if
that means shutting off cheap supplies from elsewhere. It is a fundamentally
different approach. We're in conversation with
our allies and friends and trading partners,
executed a critical minerals agreement with Japan. We have a free trade agreement
with Canada and Mexico. We have a free trade
agreement with Korea which permits them to
take advantage of some of the provisions of the IRA. We're in deep conversation
about doing a critical minerals agreement with Europe. What the Inflation Reduction
Act has demonstrated to countries around the
world, that they can be part of the solution too. They can make those investments. The Inflation Reduction
Act has changed the world. We are really at an
inflection point. We're moving from a world
that has been globalising, a world in which rich
countries have been essentially offshoring and
outsourcing production to emerging markets and
developing countries. The IRA programme is set up
to drive green nationalism. Ronald Reagan's attitude
to economic policy and his famous remark, "the
nine most dangerous words in the English language are
- I'm from the government and I'm here to help," that's
just dead, and bipartisan dead. The Biden administration
thought that it was rejoining the climate fight. Everybody would welcome
leadership from the US. In fact, the reaction,
especially in Europe, has been quite hostile. It's pretty clearly a
violation of the WTO. You could say by now, the
WTO is moribund anyway. Who cares? But it's another
nail in the coffin. The basic consensus was
that the governments create the rules, the framework
within which business operates. But governments aren't actually
in the competitive arena with their money. Once you move to a
world in which they are, everything becomes very
uncertain and unpredictable. And it makes co-operation
much more difficult. And these were all the
reasons why, after the '30s, we tried to create
something like the GATT WTO. So it could be very bad
for international relations and the international economy. It got a lot of flak
from Europeans, which I found kind of amazing because
Europe - and many countries, for example - have
been complaining for years that America
should do more about climate. This bill does mark a
fundamental shift away from the market-knows-best
strategy. We're going to say
climate change is a war that we have to win. Fighting for a
clean-energy future requires industrial strategy. And that's not about the market. That's about the state being
an actor in the economy and really pushing change
that frankly the market hasn't made in the last
three or four decades. It's clearly going to
encourage European businesses to invest in America. Indeed, it's already happening. It is making the US
look more attractive and be more competitive. They're doing it with
the fiscal firepower of a unified federal government. And the Europeans, obviously,
find it very difficult to respond to that in
aggregate because they don't have a federal fiscal power. The concern, of course, is
that the response in Europe will generate a subsidy
war within Europe. We've already
touched off a subsidy where we have a kind of arms
race that's been touched off, a green arms race. Do we need subsidies
or economic incentives to develop this
industrialisation? Yes. There is a risk of a
battle of subsidies, even internally
in EU, by the way, because of course, the level
of development of countries are different. This race to the bottom
in internal subsidies could be fundamentally
distorting and even, I think,
threaten the single market. Everybody knows who will
win that subsidy war. Germany will win it because
their fiscal position is so much stronger and they
have a bigger domestic market. What the IRA has allowed is
the US to take a leadership position in the transition. I think it is something
that they're striving for. I don't think it necessarily
puts the US in a leadership position until you see
the scale get built out. What that does for Europe,
I think, is challenges some of the
jurisdictions in Europe. It has been a wake-up
call for Europe on the industrialisation
policy, which was not something that you do at European level. It's not an
industrialisation force, as it is not a
foreign policy force, because of the nature
of the institution is not the federation. Where is the space of
competitiveness for Europe? And in some cases,
Chinese won already in the battery industry or
the electric vehicle industry. We may have space. But we have to define this. Can we do that together with
the US or independently? I think that's a
big question mark. What I hear from a lot
of European companies and I hear from European
governments as well, is look, the United States is pushing us. We need to get our act together. We want to see rapid deployment
of clean technologies in Europe. That's in the world's interest. And that's why we're
in dialogue on things like trying to land a
critical minerals agreement. There's every chance that at
some point the EU and the US are agree on some shared way to
source minerals for the energy transition. But for now, the
tensions are at the fore. And they could get much worse. It will create trade tension. It is already creating
trade tension. We know that nobody
can develop on its own. And we need this
balance between openness and national development. So it's a very uncharted waters. It could be very dangerous. We are exactly in the
format of the 1914s, more protectionism, more tension,
more investment in military. That's not bode well. You could imagine
retaliation on one side leads to counter retaliation globally
in the context in which there's already very bad relations
between the western powers and China, and lead to a very
dangerous downward spiral in trade and in
international relations. What this legislation
is intending to do is to ensure that the
United States keeps its commitment on climate. And it'll have a very
substantial benefit to the global economy. Make no mistake about it. The investments in the United
States, driving down the price, will help economies
globally deploy at scale. And it's going to
be a major challenge to get these factories
built and running. Construction groups
think the sector needs to fill another 500,000 new jobs
just in the next year alone, more labourers than the
US actually has available. Quite how the administration
fixes that problem is unknown. So what does the Biden
administration do then? Does it soften the terms
for local labour and so on? Does it start to turn a blind
eye to the import of wafers from China for solar
panels, for example? I think this obsession, we have
to reduce dependence on China, again, can be understood
but cannot be an objective in itself. Sometime nationalism is
blurring the rational thinking. China remains the
factory of the world. For all these parts that
will be critical in batteries and solar, China
controls almost all of the anodes, the
cathodes for batteries. It controls almost all of
the lithium processing. It builds almost all the wafers
that are used in solar panels. China will remain a
dominant supplier to the US and everywhere else in
many essential areas. It's really impossible
to cut it out. And at some point, I think
the Biden administration will have to come to an answer
about whether they prioritise the cutting of emissions
and doing all this cheaply, which probably means more
supplies from countries like China, or whether it really
is about re-industrialisation and the climate
targets can be delayed. We can't keep the 1.5 objective
of global-warming temperature as a limit if we don't do
technological co-operation. We need Chinese capacity. If we operate in a very
fluid economic environment without this trade tension, we
will achieve the climate goal more quickly. To create a transformation
in the industrial system, you have to distort markets. One of the big
challenges is that once you start doing that you create
political allies that want that distortion to continue. American producers
of solar panels are more expensive than
their overseas competitors. That, along with a bunch
of supply-chain issues, means that US buyers
of solar power are paying more money than
their competitors overseas. That's, over the long term, not
good for the green transition because it makes a very
promising technology more expensive. I think the Europeans
relied on cheap fossil fuels or at least lower-priced
fossil fuels from Russia. They regretted that
at the end of the day after Russia violated
international law and invaded Ukraine. This idea that
cheapest is always best opens you up to economic
security problems. In the next 20 to 30 years,
we need to fully decarbonise. That's going to require a
guide and a market guide from government and private
investments to work. That's what we see happening
right now with the Inflation Reduction Act. China is now the largest emitter
in the world, almost double the size of the United States. The United States remains
the world's historic largest emitter. We both have to do more. Competition can be healthy
in this sector too. It can drive down costs. It can lead to innovation. I think it's also important
to realise that it was passed in the follow up
of the pandemic, in which supply chains around
the world were completely strained. Our supply chains, here
in the United States, are going to be as low carbon
as it gets because we're getting our poly silicon from
a facility in Washington state which has a high degree of
hydropower that's powering its grid, meaning that
the embedded carbon in the products that we produce
here will also be lowered. There are big questions
about how the IRA will impact the Global South. The understandable complaint
from emerging markets is hey, western world,
you had your fun. You had 100 years of polluting. And now you want to
change everything. And we have to pay the price
even though we don't get the same level of development. And that's a very
legitimate criticism. There are countries
like Chile, which was a leader in green
hydrogen or was poised to become a leader
in green hydrogen. Chile can't afford the
subsidies that the US has. So its natural advantage of
abundant renewable energy has been wiped out. US, like Europe and
others, have to buy a lot of critical materials
that for the moment are mostly controlled by China. It's not possible
just to consider only the national
interest and not the necessity for developing
countries to, in a way, develop their own industry,
and not a new model we have to invent. If not, we will have a lot of
tension and a lot of blockage and a lot of competition
from China or others. And I don't think we necessarily
will win this competition. You could imagine the US and
Europe bringing countries in Africa and Latin America
into a new trade paradigm where they say, hey, we
will help fund some of the clean
transition in exchange for guarantees of
critical minerals. That's what the IRA does. It says fundamentally,
we are going to need some politics,
some statecraft, as part of the
climate transition. And we're not going to
be able to just come up with a carbon price and expect
the Global South to pay for it. The climate crisis
doesn't care if you're in a red or blue state. It's an existential threat. One of the other really
fascinating features of the investment
that we are seeing since the passage of
the Inflation Reduction Act and the Chips Act is
that 80 per cent of the money is going to
Republican districts. It is very ironic
when Republicans didn't support the IRA
and few Republicans supported the Chips Act. Maybe not so good
news for the Democrats if they can't take the credit
for creating those jobs. The so-called Paris Climate
Accord - it's a disaster, a death sentence. It's possible that you
could see, in 2024, a re-election of Donald Trump. And at that point, I think
all bets would be off. One of the really important
features of the Inflation Reduction Act, according to
developers and their lawyers when they look at
the fine print, is that the tax credits are
embedded in the legislation for 10 years. Quite how a future Republican
government could unpick them is yet to be seen. Will all of it stay? Probably not. Will there be a big effort
by the by a second Trump administration to roll
back a lot of regulation, put judges in place that don't
want the administrative state to have so much power? Absolutely. So there's going to
be a lot of chaos. But the president
is the president. And if you saw
someone like Trump come in and simply
just use all the tools of the executive office to make
it very difficult to get things done, then yeah, I think that
that would be a real headwind. When the Affordable Care
Act originally passed it was unpopular. As people understood
that Obamacare was really delivering, it became popular. And I think that will
happen with regard to these investments when
the jobs are created, when steel is in the ground. The Inflation Reduction Act
has put a line in the sand with a post-neoliberal politics
in which the market doesn't always know best. There comes a time when
the government has a role to play in ensuring
public goods, like dealing with
global warming. There are big challenges. I won't kid you. We've got permitting challenges. We've got supply-chain
challenges, interest-rate challenges. We're investing in this country,
we're building things again, that will deal with the
environmental consequences of generations of over
reliance on fossil fuels. It won't go close to actually
achieving net zero globally. Much of the other
things that are needed are going to be far more
politically difficult than this. There is nobody operating
in the clean-energy sector or in the semiconductor
sector who thinks that the US can do it alone. Nobody. America does not
have all of the means to control all of
the supply chains for the clean energy
revolution, period. It will be seen as revolutionary
in the general view we have of what the western world
thinks the right way of doing economic policy is. The Americans, real advocates
of free markets and free trade, have said we are going to
do it in a different way. I don't think that
can happen in the US without changing everything. America has been the exemplar
and the shaper of the world order ever since the
second world war. We thought we were in the era
of free-market globalisation. And now we're not.
