Transatlantic Cues: How the United States and European Union Influence Each Other’s Climate Policies

With the Inflation Reduction Act in the United States and the carbon border adjustment mechanism established by the European Union, ambitious yet contentious climate policies have been passed on both sides of the Atlantic in recent years. Each of these policies has spurred the other to consider not only the impact of these policies themselves, but whether the policies can serve as inspiration for further policy innovation. As new administrations are set to enter office on both sides of the Atlantic, and as the geopolitical landscape is getting more complicated, we examine the implications of the recent landmark policies in the United States and European Union for the evolution of climate policy over the next decade. We also reexamine the received wisdom on effective design for effective climate policy mix that targets net-zero emissions goals.