Germany Calls for a Unified European Response

Germany is calling for a unified European response to the U.S. Inflation Reduction Act, which includes the simplification of government support rules and the expansion of funding options, according to a document from the German Ministry of Economics that has been obtained by Reuters.

The European Union could develop a program to promote green technologies by combining different funding elements to avoid budgetary constraints. For instance, the Innovation Fund could increase support for large projects in the clean technology sector, or the European Investment Bank (EIB) could take on more risks through guarantees, the document states.

The ministry's document also suggests that member states strengthen sustainability criteria in national public procurement and expand or increase traditional subsidy programs, while warning to consider local content requirements that support domestic industry. According to the document, this not only would contradict the rules of the World Trade Organization (WTO) but also contribute to "further erosion of the global trading order."

EU countries welcome Washington's commitment to invest in the clean technology sector but argue that the U.S. subsidies of €200 billion related to local content could violate WTO rules, putting their companies at a disadvantage.