The European Union has been left fuming after a senior White Official pushed back against criticisms over the massive $369billion (£307billion) climate spending plan launched by the US last year. John Podesta, President Joe Biden’s senior clean energy adviser slammed the bloc’s complaints, saying that the US would make “no apologies” for prioritising American jobs, amidst accusations that Washington DC had started a trade war in a bid to become the world leader in the energy transition from fossil fuels like oil and gas to renewables.
Last August, the US passed President Joe Biden‘s Inflation Reduction Act, which provided massive boosts to companies looking to develop renewable energy and build electric vehicles in the country.
Even in the UK, Whitehall officials fear that the controversial Act will in effect ban UK-made green technology cars from the US market by allowing massive subsidies for the struggling American sector and setting up crippling tariffs.
With such tantalising tax incentives offered by the US, experts have warned that companies in Europe have begun moving their production across the continent.
However, Mr Podesta pushed back against accusations that the policies would divert investment away from the continent and undermine the economy, arguing that the continent should “welcome US leadership”.
He called on Europe to take responsibility for developing its own clean energy sector, telling the Financial Times: “We make no apologies for the fact that American taxpayer dollars ought to go to American investments and American jobs.
“We hope that the European industrial base will succeed, but it’s up to Europe to do some of the work. We’re not going to do that all for them.”
Since the passing of the IRA, over $90billion (£75billion) in green investment has flowed into the US, as the Bill includes lucrative tax grants and loans to boost domestic renewable energy industries.
The IRA also provides tax incentives for companies sourcing their materials and parts from countries that have a free trade agreement with the US, which excludes the EU and UK.
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As a result, politicians in the EU have warned that the scale of the subsidies could undermine the bloc’s own efforts to secure investment, with French President Emmanuel Macron fearing that the IRA could “fragment the west”.
Mr Podesta said: “The challenge of dealing with the climate crisis requires . . . a transformation of the global economy on a size and scale that’s never occurred in human history so there’s plenty of room for everybody to participate in that.
“If there’s a race here, it’s a race to deal with the climate crisis . . . I think [Europeans] welcome US leadership in that race.”
He noted that this plan would also help the country end its reliance on China for renewable energy technology, as Beijing is currently a player in solar panels and lithium, which is used in manufacturing electric car batteries.
He continued: “We’ve seen in the war in Ukraine, with Europe’s dependence on fossil fuels from Russia, what can happen if a country decides to use its power over the market as a weapon, and we’re trying to change that dynamic.”
According to the Rystad Energy consultancy, the impact on the battery and electric vehicle sector is the biggest points of contention between the US and Europe.
This is because the Inflation Reduction Act allocated $23billion (£19billion) to transport initiatives, with tax incentives of up to $7,500 (£6,232) per vehicle on offer for cars whose batteries were either made or assembled in North America.
Following these plans, US automaker Ford announced that it is moving most of the positions concerned from Germany back to the US, including roles in product development and administrative areas.
Up to 3,200 jobs will be moved across the whole of Europe as the automaker cuts costs by shifting production towards electric vehicles.