EU chief says bloc must act over US climate plan ‘distortions’

BRUSSELS: EU chief Ursula von der Leyen said on Sunday (Dec 4) the bloc must act to address “distortions” created by Washington’s US$430 billion plan to spur climate-friendly technologies in the United States.

The European Union must “take action to rebalance the playing field where the IRA (Inflation Reduction Act) or other measures create distortions”, von der Leyen said in a speech at the College of Europe in the Belgian city of Bruges.

EU countries have poured criticism on Washington’s landmark Inflation Reduction Act, seeing it as anti-competitive and a threat to European jobs, especially in the energy and auto sectors.

The act, designed to accelerate the US transition to a low-carbon economy, contains about US$370 billion in subsidies for green energy as well as tax cuts for US-made electric cars and batteries.

Von der Leyen said the EU had to work with the US “to address some of the most concerning aspects of the law”.

She said that Brussels must also “adjust” its own rules to facilitate public investment in the environmental transition and “re-assess the need for further European funding of the transition”.

French President Emmanuel Macron seized an opportunity on a state visit to Washington for talks with US President Joe Biden last week to air deep grievances over US-EU trade.

The White House touts the IRA as a groundbreaking effort to reignite US manufacturing and promote renewable technologies.