Inflation Reduction Act: What does this new bill mean for climate change mitigation?

On August 7 2022, the US Senate passed one of the most important legislation in its history. The bill, formerly known as the Inflation Reduction Act would essentially allocate $369bn to reducing greenhouse gas emissions and investing in renewable energy sources.
This would essentially reduce America’s emissions by about 40% by 2030, compared with 2005 levels*.
*Independent analysis of the proposed legislation in the Guardian
To put it in context, This bill would eliminate around 1bn tons of greenhouse gases by 2030, which is more than double the total annual emissions of the UK. The new bill plans to transform the energy generation and distribution of America and shape the country’s climate and industrial policy for decades. Through this new legislation, the US could add 550 gigawatts of renewable energy from sources such as wind and solar*.
*According to an analysis from the American Clean Power Association.
The various climate and energy provisions of the legislation would also speed greenhouse gas cuts and put the U.S. on the path to fulfilling its target to cut emissions in half by 2030. A major portion of the legislation consists of tax credits aimed at getting clean energy to the mainstream. According to the bill, consumers could be reimbursed up to $7,500 for a new electric vehicle, and $4,000 for a used car.
A sum of $1.5 billion will also be made available to oil companies cut down their greenhouse gas emissions. The bill will reward those gas and oil companies which avoid methane leaks but will penalise those with leaks with a fee of up to $1,500 per tonne of methane emissions. The bill, when it becomes an act, is expected to create 1.5 million jobs through the clean energy sector*.
*According to reports by Energy Innovations
With the new bill, the US government plans to take on China in the clean energy sector by giving billions of dollars in incentives for the domestic production of clean energy materials. According to the IEA*, China currently manufactures 80% of the solar cells and modules, which could go up to 95% by 2025.
*International Energy Agency
While the bill has a lot going for climate mitigation measures, one of the sour points for climate activists is it continues to support drilling for gas and oil. New drilling leases will continue on Federal Land including new oil and gas drilling leases in Alaska and the Gulf of Mexico. It will also promote unproven technologies like carbon capture and storage for coal powered plants. But overall, the new bill is considered a landmark achievement for the international effort to prevent global warming by more than 1.5C (2.7F) beyond pre-industrial levels and the first big steps that the US is taking to avoid runaway climate change.

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