Lurope’s threats burst out against the United States, accused of “protectionism” by Brussels and the Elysée. In question ? The Inflation Reduction Act (IRA), a major budget law adopted by Congress in the summer of 2022, which provides for some 370 billion dollars (344 billion euros) in investments in renewable energies, transport, energy savings energy and green technologies. The IRA comes on top of two pieces of legislation passed earlier in 2022: the Infrastructure Act and the Chips Act for semiconductors and research and development.
Because some IRA subsidies are conditional on the relocation of production, the European Union (EU) threatens the United States with litigation before the World Trade Organization (WTO), and even with a war business if they didn’t go back on the IRA. However, we must not be mistaken: these threats have no chance of succeeding.
As President Joe Biden indicated to Emmanuel Macron, the Democrats have no intention of ” apologize “ one of their most spectacular accomplishments. Any progress would also be blocked by the Republicans, who control the House of Representatives. Since the presidency of Donald Trump, and in line with its protectionist policy, the United States has succeeded in preventing any lasting resolution of disputes at the WTO through institutional blockages. Secondly, a trade war would cause just as much damage to the EU, which cannot afford it in the current context of the war in Ukraine and the energy crisis.
Twenty years of inaction
Above all, the IRA is not an aberration, contrary to what Brussels or Paris suggest, and the EU must accept the new industrial policy of the United States. Even if the discriminatory character of the subsidies decided by Congress is obvious, we must not confuse the tree and the forest.
Because this law comes to close twenty years of legislative inaction on climate change. The last bill passed by Congress on the matter dates from 2009 and was buried before reaching the Senate. President Barack Obama had tried at the end of his term to circumvent Republican blockages with his Clean Power Plan, but it was abandoned by Donald Trump before being recently censured by the conservative majority of the Supreme Court. In this context, the IRA marks a decisive step forward.
In addition to the fact that it will have the effect of bringing the United States closer to the objectives of the Paris agreement by reducing its greenhouse gas emissions by 40% by 2030, the IRA has the potential to transform the political economy of the United States. By directing massive investments in the southern states, where the climate is most favorable to renewable energies, the IRA is creating the conditions for a political realignment of elected Republicans from these regions in favor of climate action. The law is also far from arousing the same passions among Republicans as Obamacare ten years ago, despite their “antiwoke” war. As the goal of limiting global warming to 1.5°C recedes year after year, more resolute US climate action is welcome.
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