France, Germany protest green subsidies

France and Germany’s economy ministers, Bruno Le Maire and Robert Habeck, have returned from a meeting in Washington with U.S. Treasury Secretary Janet Yellen and Commerce Secretary Gina Raimondo with few specific agreements over concerns surrounding subsidies for green technologies under the U.S. Inflation Reduction Act (IRA). European countries are worried that the IRA, which is designed to protect U.S. companies from the impact of price increases and subsidize investments in new green technologies, will hurt their firms’ competitiveness in the North American market.

The economy ministers discussed the need for transparency on the subsidies provided under the IRA and expressed a willingness to match them if necessary. Habeck and Le Maire also stated that there was no rush to find a solution to the issue of access to raw materials. They listed a commitment to have the U.S.-EU Trade and Technology Council develop common standards for green goods, as well as an agreement to explore the creation of a “critical minerals” club aimed at reducing dependence on China for minerals in batteries, among the meeting’s achievements.

However, readouts from U.S. officials were less specific about the outcome of the meetings and signaled no major concessions. The U.S. Treasury stated that Yellen discussed both the U.S. and European clean energy subsidy plans and stressed the need to stimulate innovation and technology development on both sides of the Atlantic. Meanwhile, the Commerce Department said that Raimondo noted that the IRA is a key tool for the U.S. and is the country’s most significant climate legislation to date, but also applauded the TTC’s work to promote transparency for U.S. and EU semiconductor subsidies and support supply chains.

The concern over the IRA centers on Europe’s competitiveness in future industries such as electric vehicles and battery manufacturing, as well as access to the raw materials that go into these industries. While Canadian and Mexican companies are eligible to benefit from the provisions of the act, European companies are not. Some U.S. lawmakers argue that opening the act’s tax credits to European rivals would reduce the competitive advantages for U.S. companies and limit U.S. investments.