The idea of an aid system similar to the US Inflation Reduction Act (IRA) is beginning to gain ground in the European Union. For several weeks, Europeans have been pointing at the US tax credit system that favours local green technology producers (see EUROPE 13054/2, 13012/16).
France and Germany are calling for a major European response, and the President of the European Commission, Ursula von der Leyen, agreed on Sunday 4 December. “The US Inflation Reduction Act make us reflect on how we can improve our state aid frameworks, and adapt them to a new global environment”, she said in a speech at the College of Europe in Bruges on Sunday.
French Economy Minister Bruno Le Maire welcomed the Commission President’s announcement. “We believe that the best response to an American IRA is a European IRA. That is to say, Europe’s capacity to equip itself with the same simple, massive and effective means to reindustrialise the continent and successfully decarbonise the European economy [...] The American decisions must be an opportunity for a European leap forward”, he declared on his arrival at the Eurogroup in Brussels. He also called for the protection of strategic investments in Europe.
His German counterpart, Christian Lindner, also believes there must be an open discussion on support for the ecological transition in Europe. To this end, he said he was in favour of a discussion that would allow for the redirection of existing funds. The rules on State aid can also be improved, he said.
On the other hand, the German liberal rejected any idea of a European sovereign wealth fund that would imply a new European debt. “This would be a threat to our competitiveness”, he said.
At the same time, in Washington, European Commission Executive Vice-Presidents Valdis Dombrovskis and Margrethe Vestager were also discussing the IRA at the third meeting of the EU-US Trade and Technology Council (TTC) (see other news).
The joint press conference had not yet taken place at the time of going to press, although announcements or details were expected on the IRA.
The joint statement adopted at the end of their meeting does not provide any details on the resolution of this potential dispute. However, both parties agreed that the TTC had a role to play in this issue.
“We also took stock of the work of the dedicated Task Force on the IRA and noted the preliminary progress made. We acknowledge the EU’s concerns and underline our commitment to address them constructively. We underline the TTC’s role in achieving this and in supporting a successful and mutually supportive green transition with strong, secure, and diverse supply chains that benefit businesses, workers, and consumers on both sides of the Atlantic”.
See the TTC joint statement: https://aeur.eu/f/4ho (Original version in French by Léa Marchal)