EU raises concerns about production requirements in US Inflation Reduction Act

The European Union and the United States are seeking a solution for key aspects of “discriminatory” production requirements in the US Inflation Reduction Act (IRA). The EU said it might bring the case to the World Trade Organization if a compromise cannot be reached.

Image: European Commission, Flickr

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The European Commission and the US government have set up a task force to address EU concerns over the recent introduction of the IRA.

“The task force will address specific concerns raised by the EU related to the IRA,” the commission said in a statement in late October. “Both sides agreed on the importance of close coordination to support sustainable and resilient supply chains across the Atlantic, including to build the clean energy economy.”

Valdis Dombrovskis, the executive vice president of the European Commission, said the issue is a major concern for concern for many countries and businesses.

“It would appear that many of the green subsidies provided for in the act may discriminate against EU automotive, renewables, battery and energy-intensive industries,” said Dombrovskis.

According to Bloomberg, Brussels has asked the US government to remove discriminatory production requirements included in the act, as they could lead to “reciprocal or retaliatory measures.” The news outlet also reports that the European Commission is seeking an amicable solution to the matter, although it hasn't excluded the possibility of bring the matter to the World Trade Organization.

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The IRA – known technically as H.R. 5376 – Inflation Reduction Act of 2022 – covers a wide range of areas, including energy- related legislation. It increased the Investment Tax Credit for renewable energy projects from 26% to 30% and extended it to all storage projects. It also includes tax credits to manufacture solar panels, inverters, and racking components. In addition, there are more tax credits for electric vehicles, electrical panels, heat pumps, and many other products directly related to the renewables industry.

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