The Clean Tech Arms Race has Begun
European lawmakers are being forced to match historic US subsidies for green technologies, sparking a new era of competition for planet-saving solutions.
A pavilion with a slogan in Davos, Switzerland, on Monday, Jan. 16, 2023.
Photographer: Stefan Wermuth/BloombergIt has dominated the headlines out of Davos this week, prompted diplomatic grumblings from Germany and put European lawmakers in a bind. Passed last year, a historic US climate bill has opened up a new era in geopolitics, one of unprecedented global competition to develop planet-saving technologies.
The US ranks top when it comes to the cumulative greenhouse gases added to the atmosphere since the industrial revolution, but remains behind in reducing its reliance on the fossil fuels that are heating up the planet. Despite its name, President Joe Biden’s Inflation Reduction Act, which became law last summer, is aimed at rapidly changing that status as laggard.
The size of the US economy and the unprecedented scale of the subsidies the IRA offers to develop green industries are, however, forcing European lawmakers to respond as businesses warn that the continent could lose investments.
As the US numbers have sunk in, officials from European Commission President Ursula von der Leyen to the leaders of France and Germany have called for Europe-wide and country-specific industrial bills aimed at matching the incentives being dangled by their greatest ally.
“To keep European industry attractive, there is a need to be competitive with offers and incentives,” von der Leyen said in a speech at Davos. “We must also step up EU funding.”