TL/DR –
Germany is calling for a joint European response to the US Inflation Reduction Act, which may simplify state support rules and expand funding opportunities. The European Union may set up a programme promoting green technology, which combines different funding elements to avoid budget restrictions, such as the Innovation Fund supporting large-scale clean tech initiatives. However, the EU warns against local content requirements that could contradict World Trade Organization law and further erode world trade order.
Germany Advocates for Joint European Response to U.S. Inflation Reduction Act
Germany is advocating for a unified European response to the U.S. Inflation Reduction Act. The country aims to simplify state support rules and increase funding opportunities, as per a document from the German economy ministry.
The European Union (EU) could establish a programme promoting green technology. It would combine different funding elements, bypassing budgetary restrictions. The Innovation Fund could be expanded to support large-scale clean technology projects, or the European Investment Bank (EIB) could shoulder more risk via guarantees, the document suggests.
The document also proposes that EU member states could strengthen sustainability criteria in public tenders at the national level. They could also extend or enhance traditional subsidy programmes. However, the document warns against local content requirements that favour the domestic industry, stating that such measures could breach World Trade Organization (WTO) law and further erode the world trade order.
Although EU countries applaud Washington’s investment in green technology, they assert that the $207 billion in U.S. subsidies tied to locally produced content could violate WTO rules, disadvantaging European companies. To resolve this issue, the EU and Washington have formed a joint task force to address the concerns surrounding the $430 billion act.
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