China has opened a dispute with the US at the World Trade Organization (WTO) over renewable energy incentives under its flagship green law, claiming they breach trade agreements by discriminating against Chinese products.

The WTO said China has requested dispute consultations with America over some provisions in its Inflation Reduction Act (IRA) covering renewable energy and electric vehicles.

Beijing claims these violate international trade treaties including the General Agreement on Tariffs and Trade (GATT).

In the case of renewable energy, China claims IRA rules on the Investment Tax Credit (ITC) and Production Tax Credit (PTC) include bonus elements “that are contingent upon the use of domestic over imported goods”, with 10% uplifts available for domestic content.

The Chinese complaint specifically cites requirements over use of 100% US-made iron and steel, and the inclusion of a certain percentage of domestic components.

The ITC and PTC have been key to huge planned investment in renewables under the IRA, which offers almost $400bn of incentives to clean tech firms and projects.

The Chinese dispute with the WTO also takes aim at the Clean Vehicle Credit designed to support domestic manufacturing of EVs.

The Chinese complaint marks a new escalation in an already tense global trade environment for energy transition technology, with China itself frequently the target of criticism for its own measures to support its manufacturers at home and abroad.

The US hit back, with trade ambassador Katherin Tai saying: “The Inflation Reduction Act is a groundbreaking tool for the United States to seriously address the global climate crisis and invest in US economic competitiveness.

“It is our contribution to a clean energy future that we are collectively seeking with our allies and partners. Meanwhile, [China] continues to use unfair, non-market policies and practices to undermine fair competition and pursue the dominance of [its] manufacturers both in [China} and in global markets.”