US and Japan to sign pact on critical mineral supply chain for EVs requirement

Subject: International relations

Section: GROUPINGS

Context:

Japan and the United States have reached an agreement on trade in critical minerals for electric vehicle batteries, part of an effort to diversify supply chains and reduce reliance on China for strategically important resources.

More about the news:

The US and Japan will boost cooperation on critical mineral supply chains as inorder to counter China’s dominance in the electric vehicle battery industry.
Following the pact, electric vehicles that use materials that have been collected or processed in Japan will be eligible for EV tax breaks under the US Inflation Reduction Act,
It is a similar to an agreement Washington has been negotiating with the European Union which would extend access to some of the as much as $369 billion in handouts and tax credits available over the next decade under the IRA, in areas including wind, solar and electric vehicles

What is Inflation Reduction Act (IRA):

The Inflation Reduction Act of 2022 (IRA) is a landmark United States federal law which aims to curb inflation by reducing the deficit, lowering prescription drug prices, and investing into domestic energy production while promoting clean energy.
It is a reduced version of the Biden administration’s proposed Build Back Better Act.

The legislation stands to be the single largest investment in climate and energy in the U.S. to date.