US climate envoy John Kerry said Europe should increase its spending to expand clean energy options and deal with climate change, defending green subsidies presented by Washington at the World Economic Forum in Davos.
The $369 billion in clean energy and climate provisions included in the Inflation Control Act has angered US trading partners and allies, who argue that billions of dollars in tax breaks aimed at expanding green technologies and spreading them across the United States discriminate against them. foreign companies.
“Our view is we need more of it,” Kerry said on Wednesday, referring to US support for environmental protection. “Europe is already spending an enormous amount of money, but let’s go guys. Each of us needs to do more.”
The European Union, South Korea, Canada and the United Kingdom are among those who claim the law violates World Trade Organization rules by tying aid to US domestic production.
A specific area of concern is the ruling providing a $7,500 subsidy for electric vehicles built with North American parts and assembly.
Battery raw materials must be sourced from countries that have a free trade agreement with the United States, with the exception of the European Union and the United Kingdom, although the Treasury Department suggested in December that the definition of “free trade agreement” could be expanded to include a wider range of countries.
EU and US officials have set up a working group to try to craft the law as it is implemented by the US Treasury Department and the Internal Revenue Service, which is the US tax authority. US allies hope Treasury officials will explain the gray areas in the language of the bill to mitigate the impact on foreign companies.
But Kerry said that while the United States will work with allies on their concerns, the “fundamentals of legislation” is “exactly what we need.”
Kerry has previously attacked trading partners who have criticized Washington’s climate spending bill as discriminatory. “The reaction shouldn’t be, ‘Oh my God, you shouldn’t be doing that, you’re putting us in an unfair position,'” Kerry said on Tuesday. Everyone needs to do the same to speed up this process even further.”
European Commission President Ursula von der Leyen told CEOs in Davos on Tuesday that Brussels will aim to temporarily ease state aid regulations in a bid to speed up approval of subsidies for green industry. However, the plan will need the support of member states.
U.S. Trade Representative Katherine Tay said Wednesday in Davos that the world is moving toward a “new version of globalization,” and that the United States will pursue trade policies that “promote resilience and sustainability, not only for the sake of the planet, but also for the sake of people and inclusivity.”