UNITED STATES: The White House has refuted accusations that it is waging a war on subsidies as a result of its extensive support for green energy.
The United States is investing billions in loans and tax breaks to support companies that make electric cars, green energy, and microchips.
The United States wants other nations to invest similarly and work together to combat climate change, said Wally Adeyemo, deputy secretary of the Treasury.
Manufacturer Unipart claims that the UK cannot “compete on a level playing field” as it prepares to invest in the United States.
John Neil, the owner of the auto parts and logistics company, said that the United States subsidies had a “chilling” effect on the development of electric vehicles in the UK.
However, Adeyemo said, “I don’t accept that criticism, because ultimately, what we want to do is see other countries make the type of investments we’ve made in clean energy in their countries as well.”
Last year, the Inflation Reduction Act (IRA), a United States support programme, was passed.
When asked if the intention was to encourage businesses and employment from Europe and the UK to relocate to the US, Adeyemo responded, “No, I don’t think that eventually you’re going to see this as “chilling” in the EV supply chain.”
“It’s going to be additive because… you’re going to have many more consumers in the United States,” he added.
The EU has already developed its response to the IRA, the Net Zero Business Act, which accelerates existing multibillion-dollar incentives and increases subsidies for green businesses. Soon, the EU will also relax its rigorous regulations on industrial subsidies to allow for even more.
However, UK Chancellor Jeremy Hunt has brushed off the idea of taking part in “some distortive global subsidy race.”
The UK has so far had difficulty setting up a large-scale indigenous battery manufacturing industry for electric vehicles.
Earlier this year, a senior person in the auto industry expressed concern that the UK’s auto industry may vanish unless the government followed the US and EU in assisting with the transition to electric.
However, Hunt claimed in an article last month that the UK would not debate green subsidies “toe-to-toe” with the US and EU.
Hunt wrote, “Our approach will be different and better.” “With the threat of protectionism creeping its way back into the world economy, the long-term solution is not subsidy but security.”
In his interview, Adeyemo brought up the idea of “friendshoring,” which was previously discussed by US Treasury Secretary Janet Yellen.
The concept behind this is that dependable, friendly nations work together to produce goods and source from one another, creating a massive supply chain and lessening reliance on China.
“When it comes to countries like China, you’re right that they have a dominant position when it comes to the clean energy supply chain today,” Adeyemo said, adding that “a number of the critical minerals that are key to building renewable energy are mainly sourced by Chinese companies today.”
Adeyemo downplayed the IRA plan’s “Made in America” component. This means that customers can receive a tax credit to purchase an electric automobile if all or almost all of the vehicle was built in America.
The EU has expressed alarm about this, but Adeyemo claimed that it was merely a “small element” of the overall scheme.
Valdis Dombrovskis, the EU Trade Commissioner, said that he hoped that a trade war over this matter should be avoided. “It’s something that we are trying to avoid from the EU side because subsidy wars tend to be expensive and inefficient,” he said.
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