▪ The Inflation Reduction Act was signed into law on August 16, 2022.
  - The Inflation Reduction Act (IRA) is a slimmed-down version of the Biden administration’s Build Back Better Act (BBBA).
  - The IRA primarily invests in energy security, combating climate change, increasing access to health care, and strengthening tax enforcement.
  - The US Congressional Budget Office (CBO) expects the Act’s impact on inflation reduction to be less than expected, but it will help ease the fiscal deficit.
▪ Review of the impact of the IRA on related Korean industries
  - The IRA provides various incentives for producing and investing in advanced and clean industries to tackle climate change and expand the clean sector.
  - Korean companies related to clean energy generation with production facilities in the US may benefit from the IRA.
  - The IRA is favorable news for Korean battery companies with production facilities in the US, such as LG Energy Solution, Samsung SDI, and SK On.
▪ Korean battery companies depend highly on China for core materials.
  - Korea’s dependence on China for core materials exceeds 80%.
  - China’s dominance in producing battery parts (anodes, cathodes, etc.) and materials (graphite, lithium, etc.) is overwhelming.
  - The Clean Vehicle Credit offered by the IRA (up to $7,500 per new car, $4,000 per used car) has become a risk factor for Korean companies selling electric vehicles (EVs).
▪ Korean battery companies need to localize and diversify the supply of key materials.
  - It is urgent for Korean industries to address the challenge of localizing critical minerals and battery components and diversifying suppliers to reduce dependence on China.
▪ Korea’s public and private sectors must work together to respond to the IRA.
  - They must clarify their position to the US through close cooperation.
  - The EU is promoting the Critical Raw Materials Act, similar to the IRA.
  - If legislative trends similar to the global supply chain restructuring strategy appear, a pre-emptive response at the pan-governmental level is needed to guide the legislation in accordance with international norms.