‘Only good for the climate’

• Charlotte Klein

  Teacher Economics

America and Europe are bidding against each other with ambitious investment and climate plans. Where Europe was initially enthusiastic about America’s new climate ambitions, this soon turned to irritation. Brussels accuses the US of favoring its own industry I amInflation Act And A European response arrived today. What are the great powers fighting for and where is it leading?

“The initial reaction in Europe was enthusiastic, but that has changed,” says Roberta Haar, professor of transatlantic relations. “Europe has been asking the US for tougher climate policy for a long time. Now the US is finally doing it and Europe is going to complain. We have to cheer it on here.”

Hermann Wohlberg, professor of economics and environmental policy at Tilburg University, says: “Europe has been a global leader in climate policy for some time. Now we’re getting competition, and it’s irritating. America first.“

But that’s not all. The main European concerns are about industrial policy and the protectionism that the US has to contend with. Industrial policy focuses on which (big) industries the government wants to promote. Protectionism primarily means that one’s own economy is protected and favored against competition from abroad.

For example, one of the IRA’s measures allows Americans to get a subsidy of up to $7,000 to buy an electric car, but only If it is made in the USA. Hence the fears Germany The beloved German car industry is desperate to cross the ocean.

So Europe comes up with their answer to the IRA: GDIP.

Wahlberg sees few differences between the programs. For example, Europe chooses to make the polluter pay with it The emissions trading system is the backbone For climate policy. The U.S. isn’t doing that, but is actually going to pay a lot of money in the energy transition. “It is very difficult to price carbon emissions in the United States because of the federal system to regulate. But I see it as a missed opportunity. President Biden might have chosen this as well.”

Another difference is that America supports itself in its projects, Europe does not. “For example, electric cars are subsidized in Europe, but they don’t have to be manufactured here to qualify. I think the European concern about this is justified. It’s a normal trade barrier. .”

He thinks the US will not heed European criticism. “This is more than climate ambition, it’s about Democrats wanting to regain control of the states they lost to Trump. Swing States You have a lot of industries that have lost out to globalization and are very dissatisfied. Through these projects, they can restart their own businesses and ‘recover’ the areas.”

According to the professor, among the few things Democrats and Republicans agree on is that, with the IRA, America is building a fist in China. But he doesn’t think Republicans would have chosen to do that in the form of big subsidies to green industries.

He is not afraid of an expansion between Europe and the United States — especially at a time when the West is converging under pressure from Russia and China. “They’re always fighting. There’s been 40 or more fights in the WTO. Throughout history you’ve seen the United States come up with a tougher plan because of domestic economic conditions and Europe responding to that.”

Haar insists that this is only good for the climate. Wahlberg fully agrees: “We should be very happy with these kinds of incentives from above and competition between these two superpowers. In the worst case scenario, it will accelerate the energy transition.”