BRUSSELS — Germany says Europe should refrain from borrowing more money to compete with U.S. green subsidies, or its competitiveness will be threatened.
The EU has voiced its concerns over the US Inflation Reduction Act (IRA), arguing that its subsidies to North American automakers violate international trade rules. economy and threaten European businesses. European Commission President Ursula von der Leyen on Sunday said “new and additional funding is needed at EU level” to make European companies more competitive during the transition to a green economy. than.
But in Berlin, her idea was received with some skepticism.
“The US Inflation Reduction Act is an opportunity, an invitation, to rethink our competitiveness,” German Finance Minister Christian Lindner told CNBC on Monday.
“There are some parts of the Ursula von der Leyen initiative that [need] further debated, especially her suggestion of [a] European Sovereign Fund If that means rebranding existing tools, then I’m open to discussion. If sovereign funds mean a new common European debt, then I think this will not be an improvement in our competitiveness or stability, it will be a threat to our competitiveness and stability,” he said.
The ideas proposed by the head of Europe’s executive branch are still in the early stages, meaning there are no formal proposals on the table. However, they point out where the committee believes the bloc will be better positioned to compete with the United States.
IRAs — approved by U.S. lawmakers in August — include record spending of $369 billion on climate and energy policies. The landmark package includes tax credits for electric cars made in North America and supports the US battery supply chain.
“We have all heard stories about manufacturers considering moving future investments from Europe to the US,” von der Leyen said Sunday.
What are other European ministers saying?
Swedish battery manufacturer Northvolt is, according to the Financial Times, considered expanding its production in the states and benefiting from some subsidies. Again report last month suggested that the company might delay its decision to build a new factory in Germany.
Speaking to CNBC on Monday, Dutch Finance Minister Sigrid Kaag also said she likes to “take an inventory of what’s already available.” [in terms of funding for greener initiatives] and either we reuse or we refocus.”
Likewise, Ireland’s Finance Minister Paschal Donohoe said: “It goes without saying that it’s a loser, if we all use taxpayer money in different parts of the world to fund it. compete with each other.”
US and EU officials held some talks on how to tweak some of the rules in the IRA to take into account some of the concerns raised in Europe. One of those meetings took place in Maryland on Monday.
“We also appreciated the work of the US-EU Task Force on the Inflation Reduction Act and noted the preliminary progress that has been made. We acknowledge the EU’s concerns and emphasize strongly committed to addressing them constructively,” a joint statement said after the meeting. .
Last week, US President Joe Biden said that adjustments could be made “to make it easier for European countries to participate” in grants offered by the IRA.
