EU officials fear Biden’s climate law will undermine the bloc’s own efforts to drive green investment
email rounding up the latestJoe Biden’s administration hopes to unleash a green revolution by offering hundreds of billions of dollars in subsidies to clean energy companies, but the US president’s flagship legislation also threatens to spark a fresh trade war.
And, across many sectors, companies are rewarded for building equipment nationally, or sourcing components and critical minerals from the US or countries that the US has a free trade agreement with. David Kleimann, a trade expert and visiting fellow at Bruegel, the European think-tank, says that, while the IRA is a welcome piece of climate legislation, it also includes “trade-distortive subsidies” including provisions to manufacture in the US, which are prohibited under World Trade Organization rules.
Habeck said that, along with conveying the “European view of the problems” at the meeting, the pair had discussed concerns that the IRA could prompt a “bidding war on subsidies”. Le Maire said they had all agreed on the need for “full transparency about the level of subsidies and tax credits” awarded to companies.
“We’ve got a range of estimates of how big the subsidies could be, depending on how much we think consumers and companies [will] choose to access them.”
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