France, Germany protest U.S. green subsidies on Washington trip

German Economy Minister Robert Habeck and French Minister for Economy, Finance, Industry and Digital Security Bruno Le Maire hold a joint news conference in Washington, U.S., Feb 7, 2023. REUTERS/Anna Rose Layden

WASHINGTON  -France and Germany’s economy ministers found a willingness in Washington to engage with Europe’s concerns over subsidies for green technologies under the U.S. Inflation Reduction Act, but emerged with few specifics from meetings with top officials there.

European capitals worry that the act, designed to shelter U.S. companies from the impact of price rises as well as subsidize investments in new green technologies, will undermine their firms’ competitiveness in the giant North American market.

German Economy Minister Robert Habeck and his French counterpart, Bruno Le Maire, said after a meeting with U.S. Treasury Secretary Janet Yellen that they agreed there had to be transparency on the specific subsidies so that the European Union could match them if necessary.

“It’s a process, and in a process you go step by step,” Le Maire told reporters. Earlier, Habeck said there was no rush to reach a solution on the question of access to key raw materials.

The symbolic trip by the duo in charge of Europe’s two largest economies was designed to highlight the matter’s importance, Habeck added.

At stake is Europe’s competitiveness in future industries such as electric vehicles and battery manufacturing, together with access to the raw materials that go into them.

After meetings with Yellen, Commerce Secretary Gina Raimondo and White House officials, Habeck and Le Maire emerged with few specifics other than pledges to be clear about their competing green subsidies.

While Canadian and Mexican companies are eligible to benefit from many of its provisions, the act does not help European competitors.

Noting the agreement on both sides on the need for transparency on subsidies, Habeck said, “We will (create) a technical group to make this transparency work.”

“You cannot have any fair competition if there is not full transparency on the level of public subsidies and public tax credits that are granted to private companies,” added Le Maire.

Among the meeting’s achievements, Habeck listed a commitment to have the U.S.-EU Trade and Technology Council (TTC) develop common standards for green goods and an agreement to explore creating a “critical minerals” club to help both sides of the Atlantic reduce dependence on China for minerals in batteries.

U.S. responses

Readouts from U.S. officials were less specific about the outcomes and signaled no major concessions. The U.S. Treasury said Yellen discussed both the U.S. and European clean energy subsidy plans, “stressing the need to stimulate innovation and technology development and deployment on both sides of the Atlantic” to meet climate goals.

The Commerce Department said Raimondo noted in the meetings that the “IRA is a key tool for the United States and is the most significant U.S. climate legislation to date.” But Commerce said she applauded the TTC’s work to promote transparency for U.S. and EU semiconductor subsidies and support supply chains.

Some U.S. lawmakers say opening the act’s tax credits up to European rivals would lessen the competitive advantages they would confer on U.S. companies and limit U.S. investments.