Game On : The Implications of the US Inflation Reduction Act for Canadian Competitiveness

The reality of climate change and the imperative to sharply reduce greenhouse gas (GHG) emissions is now being addressed by policymakers in many countries, with the potential to transform the underpinnings of the North American and global economy.This E-Brief examines US climate policy and industrial policy in the Inflation Reduction Act, assesses its coverage and potential impacts, and provides a preliminary assessment of the Canadian federal government’s response, most recently through its 2023 budget.It makes the argument that Canada has responded in a large-scale but relatively targeted way that maintains a level playing field between the two countries for certain types of clean investment, and for clean finance.More policy developments to reduce emissions are likely among Canada’s main trading partners, potentially pulling investment away from Canada. Canada will need to be vigilant so its own initiatives and green supply-chain products are treated as equivalent under these emerging policies. But carbon pricing, in preference to matching others’ subsidies, should remain the centerpiece of Canada’s emissions-reduction strategy