German Economy Ministry calls for a joint EU response to the U.S. Inflation Act

Germany seeks a European joint response to the U.S. Inflation Reduction Act. This would include simplifying rules regarding state support and increasing funding options, according to a document from Germany’s economy ministry that was seen by Reuters Friday.

It suggested that the European Union might create a program to encourage green technology through combining different funding elements in order to not have to worry about budget limitations. The Innovation Fund could boost support for large-scale clean technologies projects, while the European Investment Bank could accept more risk by offering guarantees.

The minister document suggests that member states can anchor sustainability criteria at the national level, as well as expand or increase existing subsidy programs. However, it warns against local content requirements that favor domestic industry.

According to the document these would likely violate World Trade Organization law (WTO), and also lead to “a further erosion” of the global trade order.

Although the European Union welcomes Washington’s green tech investment drive, 200 billion euro ($207 billion) worth of U.S. subsidy tied to local content may be a violation WTO rules and disadvantage their businesses.

Washington and the EU have formed a task force to resolve the disagreement over the $430 billion act.


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