Good morning.
The Inflation Reduction Act is a hot topic in Davos this week, not because it will have any impact on inflation (it won’t), but because for the first time in the 50-year history of this forum, the U.S. has catapulted ahead of Europe on climate policy. “The U.S. incentivizes, Europe regulates,” one European-based CEO said yesterday. And while European reporters grilled U.S. government officials on whether the IRA’s climate subsidies were a form of protectionism, the speculation on the sidelines was that the EU would soon enact similar subsidies of its own.
More broadly, the conversations with business leaders here reinforced my belief that climate has lodged itself firmly, and immovably, into the strategies of most global companies. I sat down yesterday with George Oliver, CEO of Johnson Controls, who shares that view. His company sells systems for buildings and sits at the pivot point of the two transformations that are dominating business conversation here—technology and sustainability. With buildings accounting for as much as 40% of the carbon released into the atmosphere, he says the opportunity to reduce carbon emissions through smart use of technology—and ultimately eliminate them by changing energy sources—is huge.
