Why Biden’s Green Subsidies Have US Allies Fuming
Washington PostJan 30, 2023
On Wednesday, the European Commission announced plans to loosen state aid rules and propose a new European sovereignty fund to counter the US's $369B Inflation Reduction Act and China's "unfair" subsidies to domestic green technologies.
According to the proposal, the Green Deal Industrial Plan would preserve a European edge on critical and emerging technologies.
US green subsidies — which offer incentives for US buyers of electric vehicles if they "Buy American" — and unfair competition from China threaten the EU's industries as they tend to leave European firms uncompetitive and lure investments to the US and Asia. As a result, the EU plan offers a global playing field.
The EU plan must be revisited as it only helps wealthy countries such as Germany, which have the fiscal capacity to invest in domestic firms. Not all EU countries can offer subsidies to the same extent as France or Germany. As the plan could entail further joint borrowing, the EU must use funds already approved instead of seeking more money.