A new task force has been set up by the EU and US after the European Commission raised objections to August’s “discriminatory” Inflation Reduction Act (IRA) — which it argues would be detrimental to international trade and the fight against climate change.
The IRA provides generous tax credits of up to $3/kg for green hydrogen and can effectively make renewable H2 cheaper to produce than highly polluting grey hydrogen made from unabated fossil fuels.
This means that the US has quickly become the most attractive market in the world for green hydrogen producers and electrolyser makers — raising concerns about the impact on the European clean-hydrogen market, and criticisms over the lack of regulatory mechanisms and subsidies within the EU.
But while the US and the EU have agreed to set up a joint task force to work through and mitigate European concerns, hydrogen seems to have been curiously excluded from the agenda.
When asked by phone if H2 would be part of the discussions, a European Commission spokesperson asked Hydrogen Insight to send the question in writing — and her written response did not mention hydrogen and only referred to other clean-energy sectors.
“The IRA offers generous financial incentives to support the green transition. However, many of them include local content, production or assembly requirements that are unnecessarily designed in a discriminatory way and would be detrimental to international trade and thus also to climate ambitions,” the spokesperson replied in an email.
“They discriminate against EU automotive, renewables, battery and energy-intensive industries. This risks weakening competition and raising prices. It would make it more difficult to achieve the electrification of the vehicles and reduce the choice for consumers. We will be discussing with the US how to address these concerns in the framework of the TF [task force].
“The EU welcomes the US engagement on this issue and looks forward to working on solutions. We remain strong, constructive partners, and agree on the importance of close coordination to support sustainable and resilient supply chains across the Atlantic, including to build the clean energy economy.”
The task force was launched by Björn Seibert, head of cabinet to European Commission president Ursula von der Leyen, and US deputy national security advisor Mike Pyle, after a meeting in Berlin on Tuesday where they initially discussed “a spectrum of priority issues including Ukraine Reconstruction”.
According to the White House, “both sides discussed the importance of close coordination and supporting sustainable and resilient supply chains across the Atlantic, including to build the clean energy economy”, and that the task force is launched to “continue promoting deeper understanding of the law’s meaningful progress on lowering costs for families, our shared climate goals, and opportunities and concerns for EU producers”.
European Commission executive vice-president Frans Timmermans said in a speech at the European Hydrogen Week on Wednesday that “I don’t think the IRA needs to be a problem for us,” adding that European investors can be certain that the EU will not waver on the energy transition.
EU’s commissioner for competition, Margrete Vestager, stated earlier in October that parts of the Inflation Reduction Act were “discriminatory”.
“As a matter of principle, you should not put this up against friends,” she said.
Vestager also said the matter would be discussed at a meeting in December in the transatlantic Trade and Technology Council (TTC). Now, the topic seems to be expedited, as the first meeting in the new EU-US task force will be held next week.
The US is taking the matter seriously, with senior personnel involved in the talks, including national security advisor Jake Sullivan; National Economic Council director Brian Deese, and senior advisor for clean energy innovation and implementation, John Podesta.