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Europe Is Wrong to Blame the U.S. for Its Energy Problems

Finally, European leaders fear the Inflation Reduction Act will disadvantage European companies. To qualify for the tax incentives, clean energy products often must be made in the United States or, in some cases, neighboring or ally nations. For example, the new climate law requires that electric vehicles be assembled in North America to qualify for the subsidies and that their batteries be made from an increasing percentage of components mined or processed in the United States or its free-trade partners. The European Union is not one of those partners.

Europeans are right to express concerns about protectionism. Industrial policy is back in vogue, and the Inflation Reduction Act is the latest action in a growing trend aimed at boosting domestic industries, creating jobs and securing supply chains — something the European Green Deal does too. China’s own protectionism and use of its industries for geopolitical influence have made Western governments favor trade with allies — so-called friend-shoring.

Yet Europe’s current energy crisis has nothing to do with the new U.S. clean energy subsidies. Moreover, the provisions Europeans find objectionable are far from universal; for example, commercial vehicles, such as delivery vans and trucks, have no domestic manufacturing requirements to receive subsidies. Still, U.S. officials should use what discretion they have in putting the law into effect and in trade negotiations to allay potential harms to Europe and other allies such as South Korea and Japan.

With deft trade diplomacy, the Inflation Reduction Act’s sweeping new climate provisions should create more opportunities for cooperation with the European Union than it creates risks to the trans-Atlantic relationship. For example, U.S. and E.U. officials can leverage strong climate action on both sides of the Atlantic to carry out a recent agreement to restrict steel and aluminum imports, notably from China, that do not meet certain emission standards and work together to create preferential trade terms for countries that do meet such standards or impose a carbon fee on imports that don’t.

Diplomacy was underway Thursday in a meeting between President Biden and Mr. Macron. The French president spoke of the need to “resynchronize” his nation’s economic partnership with the United States to “succeed together.” Mr. Biden said he makes “no apologies” for the Inflation Reduction Act but also acknowledged the law had “glitches” and said, “There’s a lot we can work out.”

This is a positive step. Trans-Atlantic cooperation will be required more than ever to accelerate the shift to clean energy and secure those new supply chains. It is also what’s required to hold firm against Russia’s aggression in Ukraine. European leaders should tone down the rhetoric and work with their U.S. counterparts on collaborative approaches to accelerate climate action, enhance energy security and help Europe cope with its energy crisis.

Jason Bordoff (@JasonBordoff) is the founding director of the Center on Global Energy Policy at Columbia University’s School of International and Public Affairs, a former senior director on the staff of the U.S. National Security Council and a former special assistant to President Barack Obama.

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