The Inflation Reduction Act is the single largest piece of climate legislation in human history. It also employs a different philosophy to prior European attempts at climate policy. This fundamentally different epistemology is primarily responsible for the policy's success while European attempts have languished behind. Dr Friedbert Pflüger writes. 

Climate policy poses an epistemic question. It asks us what we can know about the future—and whether we are in a position to make a judgment about it. How do we govern and regulate businesses given the inherent uncertainties of the energy transition? How can we know which technologies will allow us to effectively and efficiently fight climate change twenty years down the line?

The United States and Europe provide two competing responses to these questions. In comparing America’s Inflation Reduction Act (IRA) with the past two decades of European climate policy, we can gain a better sense of how to meet our future economic and climate goals. Europe’s subsidy approach and the United States’ tax credit approach demonstrate a fundamental disagreement about epistemology, where market knowledge arises, and the limitations of policymakers.