US and EU officials opened new talks on trade in critical minerals when Ursula von der Leyen visited the White House on Friday, in a move EU officials hope will increase their companies’ access to US green subsidies.
US officials said the talks would help the two sides build secure supply chains for electric car batteries. In return, EU officials hope a deal will make its supplies of raw and processed critical minerals eligible for generous US subsidies under President Joe Biden’s flagship climate legislation.
The US Inflation Reduction Act – which aims to help the world’s biggest historical polluter cut greenhouse gas emissions to half their 2005 levels by 2030 – gives tax credits to groups that buy parts and materials from countries with which the US has a free trade agreement with. That excludes the EU and Japan, which lack such agreements with the US.
Last week, an EU official said the hope was that a loose deal on critical minerals with Washington could gain “free trade-like status” and allow products from Europe to qualify for the subsidies. The official said a more comprehensive agreement would have to be legally binding on both sides, but could be implemented using executive power in the United States.
U.S. officials said Thursday that any fuller deal would likely include “extremely high standards” on labor and the environment.
Von der Leyen said from outside the White House on Friday: “The goal is to have an agreement on critical raw materials that have been sourced or processed in the EU, that these strategic supply chains are able to access the US market, as if they were sourced in the United States.”
She added: “I think it’s very important for us that . . . we came together because fighting climate change and limiting global warming is critical to our future.”
More than $90 billion in green investment has flowed into the US since last year’s passage of the IRA, which includes $369 billion. in tax credits, grants and loans to increase renewable energy and reduce emissions.
The two sides also plan to launch a “dialogue” to increase transparency around clean energy subsidies, within days of the EU unveiling new measures allowing member states to “match” multibillion-dollar incentives as they fight for to keep projects in Europe.
Last month, French Economy Minister Bruno Le Maire and his German counterpart, Robert Habeck, visited Washington to voice European concerns that the US legislation could start a support war.
Le Maire said French, German and US officials had agreed on the need for “full transparency on the level of subsidies and tax credits” awarded to private companies, as well as the need for “constant communication at ministerial level” on strategic investments regarding both sides of the Atlantic.
On Thursday evening, a US official said that the “goal” of launching an official channel was to ensure that Washington and Brussels “communicated with each other . . . to maximize the deployment of clean energy over time and so that these incentives do not compete with each other”.
Communication would reduce the chances of “a zero-sum competition that lines the pockets of private interests,” the official added.
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