Analysis-A year on, Europe less fearful of U.S. green subsidies push
By Jan Strupczewski
BRUSSELS (Reuters) — When the United States launched its massive green subsidies push a year ago, many in Europe feared it would be a fresh blow to their regional economy grappling with the knock-on effects of war in Ukraine and lingering aftershocks of the COVID-19 pandemic.
Yet while critics argue the European Union has yet to offer a coherent counter-plan to Joe Biden's Inflation Reduction Act (IRA), Brussels appears to have done just enough to ease the most pressing concern that European companies would leave in search of dollar subsidies.
This week marks the first anniversary of the Biden administration's IRA legislation which offers $369 billion in tax breaks over 10 years for the production of electric vehicles, batteries, hydrogen or solar panels in the United States.
The EU initially welcomed the climate-friendly shift by Biden, but became worried Europe's best clean tech companies would up sticks to secure U.S. tax breaks, draining Europe of know-how, investment, new technologies and future jobs.
So far there is little evidence of that happening.
«There was a general anxiety that after the pandemic and the start of the war in Ukraine, a fear that the IRA would be a final blow to the EU economy,» said Niclas Poitiers, an economist at the Bruegel think tank in Brussels.
«The importance of the IRA for investment decisions was somewhat overstated,» he said, adding there was no data yet on whether there was any massive diversion of investment away from the EU and into the United States as a result of the IRA.
«There probably was some, there is some anecdotal evidence, but not massive.»
Key to allaying the IRA's attraction for European firms was an EU decision in March to relax its state aid
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