Sign In

European business groups attack US over latest green investment move


European business groups and lawmakers have hit out at the White House after it announced fresh measures aimed at promoting investment in homegrown green technology.

The support for American-made electric vehicle chargers, unveiled by the administration on Wednesday, comes after the US in August passed the $369bn Inflation Reduction Act, or IRA, containing hundreds of billions of dollars in subsidies and tax credits for US-manufactured clean technology.

“Our most important trading partner decides things in their own interest,” said Luisa Santos, deputy director-general of BusinessEurope, which represents companies across the EU. “They keep doing this. But they want us to support them on China.”

A spokesperson for DigitalEurope, which represents the continent’s technology sector, described the latest support as “like déjà vu”. Cecilia Bonefeld-Dahl, its director-general, said: “The way to achieve our common climate goal is not through more ‘Buy American’ but through joint action and common standards.”

The European Commission said it would seek talks with the US over the subsidies. “We must look for synergies and work to avoid trade barriers in the transatlantic relationship,” a spokesperson for the commission said last week. “We will continue to raise concerns about discrimination or local content requirements with our US counterparts.”

The latest package, part of the US’s Infrastructure Law, will see the US government invest $7.5bn in EV charging, $10bn in clean transportation and more than $7bn in EV battery components, critical minerals and raw materials.

The White House last week described the support as “a tool to promote domestic production”. To qualify, products must have at least 55 per cent content manufactured domestically from next year.

While business groups and lawmakers attacked Washington’s repeated reluctance to consult with its big trading partners on green subsidies, European companies with large US operations welcomed the additional support.

Swiss-based technology company ABB, which is one of Europe’s leading EV charger makers and counts the US as its biggest market, said the measures were “expected to be beneficial”.

“With our new manufacturing operations in South Carolina and our focus on the US market, we are looking forward to continuing to work with our partners and federal and state governments to deploy reliable and high-quality public chargers,” a spokesperson for the group said.

German chemicals manufacturer BASF, which employs more than 16,000 workers on more than 150 sites in North America, said it would “look at what opportunities there are through the framework of the IRA and the Infrastructure Law”.

“Such incentives can help support the advancement of electromobility in the US and North America and otherwise help to reduce emissions in the transportation sector,” a spokesperson said.

The commission and White House have convened a task force to find ways to implement the Inflation Reduction Act to allow better treatment of EU manufacturers. But it has made little progress in the face of US congressional opposition, with Brussels instead allowing member states to subsidise domestic clean technology industries by relaxing state aid rules.

Brussels has already threatened to complain to the World Trade Organization, whose rules forbid tying state support to domestic manufacturing, over the Inflation Reduction Act. Officials have also claimed the US is trying to lure companies away from the EU. BASF has said it will make about 15 per cent of its capital expenditure in North America over the next four years.

The latest US move also raises questions about the Trade and Technology Council, a forum set up 18 months ago to harmonise transatlantic rules.

The forum has delivered little despite being led by commerce secretary Gina Raimondo, secretary of state Antony Blinken and trade representative Katherine Tai on the US side and the EU’s trade and competition commissioners Valdis Dombrovskis and Margrethe Vestager.

“The EU and US should work together to promote resilient supply chains and support the transition to low carbon economies on both sides of the Atlantic,” the commission said last week. “This is one of the main purposes of our co-operation with the US in the framework of the TTC.”

Before this week’s White House announcement, both sides said they were preparing a joint recommendation for state-funded EV charging networks and a common standard for truck chargers. Officials say they wanted to prevent China, the biggest market for electric vehicles, from setting global standards.

Business groups are also keen for the TTC to take on a greater role in shaping trade relations.

“We have the forum to discuss these issues and align with allies — the TTC,” said a spokesperson for DigitalEurope. “Let’s use it or lose it.”

“The TTC needs to be on a higher political level,” Santos said. “Does the [US] president understand there is a logic behind it, that it should not be a talking shop but a place to discuss the consequences of US actions for Europe?”

Rayna Prime

Rayna Prime

Rayna Prime Editor