President Joe Biden said his administration will “tweak” the landmark climate law he signed in August after a storm of criticism from the EU and other trading partners over what they see as market-distorting support for America's clean energy sector.
“There are tweaks we can make that will fundamentally make it easier for European companies,” Biden said at a White House press conference with visiting French President Emmanuel Macron, without providing details of what he described as “glitches” in the law or how they would be remedied.
Macron called the Inflation Reduction Act (IRA) and its $369bn of funding for climate-related spending — including generous hydrogen tax credits of up to $3/kg — “super aggressive” to European companies, who have voiced fears over their potential to distort markets in areas such as green H2 and renewables, which are set to benefit from extensive US support.
EU, Norwegian and Australian officials have registered official complaints with the US government about the IRA, saying it breaches international trade laws, while clean energy players in Japan, South Korea and the UK have also raised concerns. They warn that the provisions, left as they are, could trigger a “harmful global subsidy race” in clean technologies and services.
Macron warned that the IRA and the CHIPS Act, another recent law with $52bn in grants and tax credits earmarked for domestic semiconductor manufacturing, could “fragment the West” by hurting Europe’s own industries.
“They create such differences between the US and Europe that those who work in those industries will simply say to themselves, ‘We no longer make investments on the other side of the ocean’,” the French leader told The Washington Post.
French officials have cautioned that unless a compromise is found, Europe may be forced to impose its own economic measures in retaliation.
Macron, however, told the Post that he was hopeful that both sides can still avoid “commercial hostility” by year end... “We do not need that. We need a real hand-in-hand [partnership],” he said.
The EU and the US had previously agreed to examine technical changes to the IRA that could satisfy European concerns in a joint task force. Macron praised the working group and said he and Biden agreed to “re-synchronize our approaches”.
“We also had an excellent discussion on the IRA and the recent pieces of legislation adopted by the American administration and like President Biden just said we agreed to resynchronise our approaches," said Macron.
“We share the same vision, and the same willingness. President Biden wishes to create more industrial jobs in the long run for his country and to build a strong industry and to secure your supplies and this is very much our approach as well. And this is the reason we tasked our teams to continue this work in close cooperation [and] coordination to find solutions.”
Both the IRA and the CHIPS Act are key parts of Biden's domestic agenda to enable the US to meet its 2030 pledge to reduce greenhouse gas emissions 50-52% from 2005 levels and cut reliance on China for renewable energy components and materials, EV batteries, and semiconductors.
