One year on, how America’s Inflation Reduction Act has changed Canada – by Naimul Karim (Financial Post – August 16, 2023)

Look back at the impact of a bill that sent shock waves through the world’s supply-chains

The United States a year ago passed a 730-page piece of legislation that almost single-handedly paved the way for some of the world’s biggest manufacturing companies to change their supply-chain systems.

Signed into law on Aug. 16 by President Joe Biden, the Inflation Reduction Act (IRA), contrary to its title, wasn’t just about bringing down inflation, which was at its peak a year ago. Instead, it promised more than US$300-billion worth of tax credits, grants and loans to fund clean-energy projects and address issues linked to energy security and health care.

With Canadian businesses, especially in the auto sector, linked to the U.S. market, the law was bound to make an impact north of the border. That’s why the Canadian government aggressively lobbied for months prior to the legislation’s passing to change certain conditions that could have otherwise hurt this country’s automotive, energy and mining industries.

One year on, the IRA has had both the desired effect on companies in the U.S. and some unforeseen consequences for others.

A boon for mining and battery sectors

A month after the law came into being, South Korean battery maker LG Energy Solution Ltd. inked deals to source materials required to make batteries for electric vehicles (EVs) from three Canadian junior miners.

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