The Inflation Reduction Act may give the U.S. climate negotiations leverage

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The Manchin-Schumer deal could finally give the U.S. some leverage in international climate negotiations

American negotiators have been walking something of a tightrope at international climate talks — attempting to lead the way on global action while domestic progress by the world’s biggest economy and second-biggest greenhouse gas emitter remained largely stymied.

But if the climate and healthcare deal inked by Democratic Sens. Chuck Schumer of New York and Joe Manchin of West Virginia, known as the Inflation Reduction Act, becomes law, U.S. negotiators may head to the next United Nations climate meeting in Egypt in November with at least a little bit of actual leverage.


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The bill includes a variety of incentives to produce clean energy, switch to electric vehicles and improve efficiency — largely a set of carrots, in contrast to the sticks of some previous legislative attempts at punishing or taxing emitters.

“Good will and good-faith negotiations are the crux of a successful multilateral system. And you cannot have good-faith negotiations if the entire premise is, ‘We’re going to make other people do things that we ourselves are not willing to do.’ You cannot have trust in a system that works like that,” said Sonja Klinsky, an Arizona State University associate professor and an observer to the U.N. climate negotiations since 2009. “I do think that this [bill] is an attempt to show some good faith on the part of U.S., and that may make some of these negotiations easier.”

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The Inflation Reduction Act would represent the country’s largest investment in climate change mitigation efforts to date. The bill includes $369 billion in tax breaks and other climate-related incentives that experts estimate could help the U.S. reach a 40 percent reduction in greenhouse gas emissions from 2005 levels by 2030 — not quite to the 50 to 52 percent the Biden administration has promised, but much farther along than with no legislation at all.

“It doesn’t go as far as what President Biden has initially wanted to do. But the fact that there is a bill … sends an extremely important signal, I think, to the rest of the world about domestic climate policy,” said Rishikesh Ram Bhandary, assistant director of Boston University’s Global Economic Governance Initiative. “It provides a credible basis to continue engaging with the rest of the world and to continue to urge other countries to also keep the momentum going, if not to do more.”

Progress at home, progress abroad

The centerpiece of the legislation is the tens of billions of dollars that would go toward boosting renewable energy including solar, wind and geothermal energy, among other sources. There are also incentives to keep existing nuclear power plants open, along with others for sustainable aviation fuel and reduction of methane leaks from natural gas wells. Low- and middle-income people could receive $7,500 in help buying an electric vehicle, among other individual incentives.

“I think it is definitely a signal that this current administration is trying to do their best to do some serious climate action, which I do think other countries will note,” Klinsky told Grid. This year in Egypt, there is hope that countries will update their emissions targets to reflect greater ambition, and money for the developing world will also be a central topic.

In general, international climate negotiations are a delicate dance, with countries pushing for action but also trying to ensure their own economic and development goals remain within reach. In previous years, it has been difficult for the U.S. to play the sort of leadership role the world’s largest economy should be playing in such an important negotiation.

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“Trust in the U.S. in climate negotiations is very low, as a result of the U.S. having shaped first the Kyoto Protocol and then the Paris Agreement, in line with their own preferences, and then failed to ratify the former and withdrew from [the] latter,” said Hayley Walker, an assistant professor at IÉSEG School of Management in France and an expert on international climate negotiations.

The U.S. also has failed repeatedly to pass meaningful climate legislation at home, perhaps most notably with the failure of the Waxman-Markey bill in 2009, which would have set up an emissions trading market. Later that year, at the highly anticipated 15th Conference of the Parties to the U.N. Framework Convention on Climate Change (COP15) meeting in Copenhagen, then-President Barack Obama was forced to travel to the climate talks late to try and salvage what ended up being a disappointing global accord.

“I would say that having some domestic legislation at least gives the U.S. some credibility on the international climate circuit,” Walker told Grid. “Whether this credibility can translate into leverage is unsure, but the opposite — a lack of leverage as a result of not having domestic policy in place — is what we saw with the Obama administration in Copenhagen in 2009, when the U.S. had a very difficult time in trying to persuade others to come around to their perspective.”

Bhandary agreed. He said that during the Obama years, the negotiators had to essentially rely on a store of global good will rather than any evidence of domestic progress on climate. The Trump era’s full abandonment of international climate goals, including withdrawal from the Paris climate agreement (Biden rejoined the agreement upon taking office), further soured American legitimacy on the world climate stage — legitimacy Biden and his congressional allies are trying to win back.

Roadblocks in the bill

The Inflation Reduction Act is clearly a step in the right direction then, but Klinsky pointed out the bill has some features and lacks some others that make it a less-than-perfect showpiece to bring to Sharm el-Sheikh, Egypt, for COP27 in November.

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“It still does allow for significant fossil fuel development in the United States,” she said. “And this is going to be a tense issue increasingly as we look at the global carbon budget.”

Scientists have estimated that emissions cuts of 1.5 billion tons of CO2 per year need to come off the ledger if we want to hit net zero carbon emissions by 2050, the target that could help stave off some of the worst impacts and stabilize the climate. Instead, emissions continue to rise, making new fossil fuel development highly problematic.

The bill mandates new offshore oil drilling leases in Alaskan and Gulf of Mexico waters, and sets annual acreage minimums for oil and gas drilling as prerequisites for permitting some renewable energy.

“There are going to be very pointed questions from the Global South as to why they’re being told they need to phase out fossil fuels when they have not significantly benefited from fossil energy, and the richest, biggest economies of the world continue to develop their own fossil fuels,” Klinsky said. “That is going to continue to be a tension in the negotiations.”

There is also nothing in the Inflation Reduction Act regarding international climate finance, an increasingly central topic to negotiations given that rich countries have failed to live up to their promises to pay the developing world to adapt and grow in the warming world. Still, there is no question that if the bill becomes law, one of the central players in climate negotiations would sit down at the table with some better cards to play.


“Had this not come through, I think you would be in a situation where the Biden administration wants to play a leadership role at the global level but would have found itself severely hamstrung by the lack of any concrete domestic actions,” Bhandary said. “It’s a signal that the American government is serious about climate change.”

Thanks to Alicia Benjamin for copy editing this article.

  • Dave Levitan
    Dave Levitan

    Climate Reporter

    Dave Levitan is a climate reporter for Grid where he focuses on interconnected stories about climate and science, and politics shaping action around both.