The US Inflation Reduction Act: Climate policy as economic crisis response

In August 2022, the US Congress surprisingly adopted the Inflation Reduction Act (IRA), which included an ambitious package of decarbonization policies. Drawing on political economy perspectives and document analysis, this article explains the policy process that shaped the IRA. The policymaking process of the IRA is explored through an analytical framework adapted to the polarized political situation in the US, where traditional lawmaking strategies like seeking bipartisan compromise or conventional use of legislative procedures are largely defunct. The analysis shows how the economic shocks induced by the COVID-19 pandemic and the Ukraine war generated a window of opportunity for a strengthened pro-climate interest coalition to employ novel policy ideas and creative institutional governance to instigate the enactment of the IRA. The combination of decarbonization policies in the IRA embodied a compromise policy package that all Democrats in Congress could accept, although its durability in a polarized legislature remains uncertain.