Oil, gas and mining

How Biden’s climate plan could steal business from Europe



U.S. President Joe Biden has a plan to boost clean energy in the United States, but European politicians worry it could drive companies and investment away from Europe.

The U.S. Inflation Reduction Act has promised $369 billion – an unprecedented amount – on climate and energy policies, including, among many other things, tax credits for consumers getting new electric vehicles.

The fear among Europe’s policymakers is that the legislation may prompt European businesses to relocate to America or develop expansion plans stateside so they can benefit from the subsidies.

Maria Demertzis, senior fellow at the think tank Bruegel, said: “There are two issues here. The first one is that there is a bit to the IRA that is in direct violation of international rules of trade. And the second one is that there is a bit that can actually distort competitiveness.”

A spokesperson from the U.S. Trade Representative’s office told CNBC that “none of our trading partners to date have publicly threatened to sue the United States over this legislation at the World Trade Organization.”

“The Inflation Reduction Act represents a historic investment in clean energy and green technology. We urge other countries to follow the United States’ lead and pass their own versions of this legislation,” the spokesperson said.

CNBC heads to Sweden to find out how these trade tensions are making businesses reconsider their investment plans.

#CNBC #ClimateChange #Europe #InflationReductionAct
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49 Comments

  1. Godzilla Mothra

    Europe need to understand that while they share the same ideology with the US, their national interests are often opposite, especially when it comes to economy. The US is a rival to the EU, and will devour EU if there is chance.

  4. Scar626

    Yeah, and also be ready to buy all your military tech from the US as well (should the worst come to worst, and the Leopard performs the way it did in Syria).

    Shame, Germany tried it's best going: "We'll only send our tanks if the US sends its tanks." The US agreed but seems like the Leopard tanks will hit the frontlines long before the Abrams does (probably hoping the war will be over long before it gets there, and the Leopards does the job it needs to and if it doesn't then the US knows to either delay or cancel).

    And you know what? Fair play to them. From this climate plan, to taking away chip manufacturing from Taiwan and bringing it to the US, to selling military tech, why would they want to, or should they play charity to Europe?

    People forgot after WW2 the US did all it could with things like the Marshall Plan and helping sell EU products, like European cars easier in the US to boost their and recover their economy (mainly because of competition with communism, not really so much because of niceties and charity). World war 2 is over and the EU can now afford their own militaries and aren't under the risk of falling to communism.

  11. Anjola Tope-Babalola

    They only count the carbon foot print after all the raw materials arrive at thier doorstep. Sourcing the raw materials amd transporting the finish products are not part of thier calculations

  12. Kasey C

    Germany has 10x the number of protectionism laws benefits their companies compared to the US. They’re finally getting a piece of their own medicine

  13. Haru Krentz

    Imagine being european leaders right now. No more cheap russian gas under the command of their overlords while the same overlords are planning to steall all of their industry.

  15. Tritano

    4:20 – 4:50
    Why is the whole of Europe summarized here, although the editors are well aware that there are differences between the EU countries?
    Norway, for example, has strong advantages for buyers of electric cars, while other countries are less focused.
    The EU countries have mandatory regulations and each country can make its own efforts to make electric cars more attractive.

  18. Raphael Demo

    I don't see the issue here. They can partner with U.S. just like they're partnering with Germany to build facilities there. The German facilities won't be enough to handle the American/Canada/Mexico capacities/needs, so they should try to court the U.S. gov too.

  27. Ameya S

    With high energy prices in Europe for the next 5-10 years at least, what little manufacturing there was in Europe will shift to USA, Asia….This is the cost of Europe outsourcing it's security to USA and just being the yes man to American geopolitics..

  36. Joel Cohen

    Here we go: first get the IRA in place to compete on a regulatory level with the EU, second bomb northstream to get rid of the competitive advantage of cheap energy. Result: european companies move investments to the US

  41. Fey418

    Europe before: You savage Americans, how dare you keep polluting our world in this age? Haven´t you heard about climate change?
    Europe now: Wait! Why are you incentivizing electric cars? Can´t you see you will take our moral and competitive advantage?

  46. Alban Musa

    I remember the last time Europe and the US got into a deregulating pissing contest, London City VS Wall Street in the mid 2000s. Remember how that went?

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