BATTLE OF THE FUTURE: US VS EU GREEN SUBSIDY WAR

Climate change is the defining issue of our current and future generations. The politicians of today,bear the responsibility of the green transition in their hands.

In response to public demands for greater environmental action, Biden and congressional Democrats passed the benchmark Inflation Reduction Act and within it $369 billion in green subsidies. Following this, the head of the EU commission, Von Der Leyen, is hoping to fast-track the green agenda in areas such as clean and sustainable energy.

For some time, the EU has been a world leader in the green transition. In 2005, the bloc (a group of countries/ political parties) implemented the world’s premier ‘cap and trade’ initiative that has managed to cut emissions by 43% in regulated sectors, a significant achievement towards cutting pollution. The US has been playing catch-up since former President, Donald Trump, pulled out of the Paris Accords in 2017.

Currently, EU firms are posed with an era of ultra-high energy costs, as well as a lack of workers. As a result, European firms now question their climate commitments because of stagnant growth alongside high costs of production making the US’s generous subsidy package a tempting alternative. Since the passing of the Inflation Reduction Act, a further investment of $28 billion has been announced by domestic and foreign firms in the US green sector. Blue Green Alliance, a joint union-environmental group, estimates that this investment could generate 9 million domestic jobs within the next 10 years.

The EU faces the challenge of not escalating tension with the USA but also remaining an advocate for green investment and growth. Twenty-seven EU leaders assembled in Brussels and issued a joint statement that reforms are to be “targeted, temporary and appropriate”. Some will argue that this response mitigates any risk of further escalation whilst also remaining positive, whilst others will argue that it falls far short of what is needed to curb the US’s rising influence.difference.

Thomas Scothern, Lower Sixth, Caswalls’