ANKARA
Europe must take action to address “distortions” created by Washington’s multibillion-dollar plan to boost climate-friendly technologies in the US, the president of the European Commission said on Sunday.
Ursula von der Leyen said the US’ Inflation Reduction Act (IRA) is an “investment plan of roughly $369 billion to build up a new industrial ecosystem in strategic clean energy sectors.”
“There is a risk that the IRA can lead to unfair competition, could close markets, and fragment the very same critical supply chains that have already been tested by COVID-19,” she said in a speech at the College of Europe in the Belgian city of Bruges.
“We must take action to rebalance the playing field where the IRA or other measures create distortions. In other words: We need to do our homework in Europe and at the same time work with the US to mitigate competitive disadvantages.”
Von der Leyen said the pandemic and the fallout of the Ukraine war, particularly the 80% cut in Russian gas supplies, negatively impacted “the competitiveness of many European industries – especially energy intensive sectors.”
The IRA, designed to accelerate the US’ transition to a low-carbon economy, includes around $370 billion in subsidies for green energy, as well as tax cuts for electric cars and batteries made in the country.
“This creates, of course, an attractive investment environment on clean tech in the US. But we already see how this could also affect Europe’s own clean tech base by redirecting investment flows,” said the top EU official.
Von der Leyen said there are already reports suggesting producers “are considering to relocate future investment from the EU to the US.”
“Now, let me be clear: Competition is good. It drives innovation, enhances efficiency, and ensures progress … but this competition must respect a level playing field,” she asserted.
