International Energy Agency Executive Director Fatih Birol on Tuesday hailed the U.S. Inflation Reduction Act as the most important climate agreement since the landmark Paris Agreement.
"The Inflation Reduction Act, in my view, is the most important climate action after the Paris 2015 agreement," Birol said during a panel on energy security at the World Economic Forum in Davos, Switzerland.
The U.S. legislation, which includes a record $369 billion in spending on climate and energy policies, was signed into law by President Joe Biden in mid-August last year. The act, which contains some giveaways to fossil fuel interests, was by far the biggest climate legislation in U.S. history.
The IRA has drawn the ire of some EU member states, however. The European Commission, the executive arm of the EU, has previously said there are "serious concerns" about the design of the financial incentives in the package.
The world's governments agreed in the 2015 Paris climate accord to limit global heating to well below 2 degrees Celsius and pursue efforts to limit the temperature rise to 1.5 degrees Celsius. For the latter, the IEA has warned that no new oil and gas projects are possible.
Speaking alongside Birol on Tuesday, Vicki Hollub, CEO of U.S. oil producer Occidental Petroleum, described the IRA as one of the most transformative bills in the world.
She added that the legislation was also "an important bill for us in that it does provide subsidies, not just for carbon capture but for electric vehicles, for lithium and for many other things that will help the energy transition."
Asked whether she was in favor of bringing an end to fossil fuel subsidies, Hollub replied, "There has been hardly any game-changing and transformational technologies that have ever been developed in the world that did not at some point have some sort of subsidy."
To be sure, the burning of fossil fuels such as coal, oil and gas, is the chief driver of the climate emergency.
The IEA's Birol said the world had "never, ever seen an energy crisis of this depth and complexity" following Russia's full-scale invasion of Ukraine in February.
At the same time, Birol said this energy market crisis had ushered in a "big boost" to clean energy development and the biggest driver of renewable energy growth was energy security.
