What the US Inflation Reduction Act means for climate

Global headlines have been rife the past week with the signing of the American Inflation Reduction Act. The bill is the largest climate package in US history and is expected to cut US greenhouse gas emissions by 31 to 44 per cent below 2005 levels by 2030. It also presents significant incentives to drive the energy transition, including:

• Ear marking almost USD 370 billion toward climate change and energy priorities
• Making the cost of producing renewable hydrogen the cheapest in the world
• Marking USD 60 billion to support clean energy manufacturing intended to accelerate production of solar panels, wind turbines, electric vehicles, and heat pumps
• Supporting carbon capture technologies
• Allocating USD 6 billion toward reducing emissions from the hard-to-abate sectors
• Introducing fines for methane gas leaks
• Establishing a Green Bank to invest in public-private partnerships that cut emissions, supported with USD 27 billion
• Introducing grants and credits to support biofuels, including infrastructure for more sustainable jet fuel.

We have sat down with a few of our inhouse experts to zoom in on what this means for the energy transition.

In our Director of Global Public Affairs, Therese Beate Bording Hermann’s perspective, the bill is going to drive the green transition not only in the US, but globally.

“It is absolutely fantastic that the US has launched the largest climate package in US history – showing unprecedented global climate leadership and action. We need action and the US is cleverly using the “carrot” through grants and tax credits to reduce the cost of energy. No doubt, the bill will place the US as one of the most promising markets for renewables and clean hydrogen. Eventually, that will unlock the “chicken-and-the egg” situation and decarbonize the hard-to-abate sectors – also outside the US.”

Sundus Cordelia Ramli, our Chief Commercial Officer, Power-to-X, sees the legislation as a tremendous opportunity to ramp up Power-to-X in the US – a key prerequisite to produce green hydrogen.

“This climate bill may prove to be the turning point of green hydrogen and its derivatives. This has so far been a nascent space in the US, but now with provisions to make the production of clean hydrogen the cheapest in the world, the country is really going full steam ahead. I am beyond excited to support with our technologies and scale it up.”

To our Director of Energy Transition Financing, Lucas Bossard, this is an excellent example of proactive climate financing.

“The US is sending a hugely positive signal to accelerate green solutions across multiple sectors, one that firmly puts the country in a very attractive position in terms of new investments. I’m looking forward to see the ripple effect this will have on the global climate finance sphere, in particular green hydrogen, where the EU and Asia may have to introduce concrete measures to match up”.


From a business point of view, our managing director for the Americas, Henrik Rasmussen says,

“This government incentive package will provide the necessary financial boost to the many decarbonization projects currently being discussed in the US. We are very excited about this new wave of green and blue projects utilizing our second to none technologies for making decarbonized H2, ammonia and MeOH for use as fuel in the US and as an export fuel to other parts the world.

Already today, we see a strong interest for our renewable fuel solutions and low-carbon technology in the US. Just a few months ago, we announced our mission to reduce our customers’ greenhouse gas emissions by 12 million tonnes by the end of 2022. And who knows, with this new legislation, maybe we can even raise the bar.”

The new legislation is expected to create significant tailwind to the hydrogen economy by offering tax credits for producing clean hydrogen with low carbon intensity – a concept that is at the heart of both Topsoe’s blue and our green hydrogen solutions.