The United States will treat essential materials for green technologies mined or processed in the European Union as if they came from the US. This has been agreed by President Ursula von der Leyen of the European Commission and US President Joe Biden. Von der Leyen was visiting Biden at the White House.
The agreements, which still need to be worked out, should provide a solution to a long-running conflict over US subsidies for green technology. The EU countries felt that the demands amounted to US protectionism.
Last year, Biden managed to pass the so-called inflation reduction law ‘IRA’ through the US Congress, which involves subsidies and tax credits of 430 billion dollars (more than 403 billion euros). One of the important goals of that law is to halve carbon emissions before 2030. The country wants to tackle the climate crisis and promote renewable energy.
But in Europe there are fears that because of the attractive IRA schemes, even European companies would rather invest in the US and therefore not put money into developing production capacity in the EU.
The European Commission presented its Green Industry Plan last month in response to the US IRA bill.
Electric cars
Batteries for electric cars, for example, require a lot of metals and minerals. Europe wants them to be extracted here too, but if the US favors those materials from its own country, it could be bad for European industry. The question is whether the agreement can also count on the support of American politicians.
EU officials say the US and Europe should stick together as allies and form a common front against bigger threats from China.
The European Commission presented its Green Industry Plan last month in response to the US IRA bill, with more state aid to help Europe compete as a manufacturing hub for cleantech products.
LOOK. Von der Leyen proposes an industrial Green Deal in Davos
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