The EU is demanding changes to the US’ green flagship Inflation Reduction Act (IRA), citing what it claims are “discriminatory” provisions that could damage the bloc’s renewable energy industry.
A document lodged with US officials and seen by Recharge’s sister title Hydrogen Insight flags up Brussels’ “serious concerns” over the impact of measures introduced under the IRA, which includes long-term incentives for renewable energy investment as well as for a raft of other clean energy-focused industries such as green hydrogen.
The EU claimed: “Given their size and design, the financial incentives deployed to meet the US’ climate objectives unfairly tilt the playing field to the advantage of production and investment in the US at the expense of the European Union and other trading partners of the US, potentially resulting in a significant diversion of future investment and production, threatening jobs and economic growth in Europe and elsewhere.”
The EU is particularly exercised over what it says are local content requirements attached to the IRA’s incentives that it claims could leave Europe-based producers unfairly locked out of the market and breach trade agreements.
Brussels warned: “If implemented in its current form, the Act risks causing not only economic damage to both the US and its closest trading partners, resulting in inefficiencies and market distortions, but could also trigger a harmful global subsidy race to the bottom on key technologies and inputs for the green transition. Moreover, it risks creating tensions that could lead to reciprocal or retaliatory measures.”
The EU listed a series of demands for modifications to the $369bn IRA package signed off by President Joe Biden in August, including removal of “all discriminatory content and production requirements affecting the European Union and its economic operators and products”.
Recharge has previously reported how Europe-based renewables giants have urged the bloc to look to replicate the scope of support given to clean energy industries by the IRA, which also contains landmark incentives for green hydrogen.
The finance chiefs of Vestas and Orsted last week both said Europe needs to accelerate help for green investment, while remarking favourably on US initiatives.
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