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Christina Ramm-Ericson, TechSverige

Important to review the US Climate Change Inflation Reduction Act (IRA)  

EU
There have been many question marks since President Biden unveiled his subsidy package last fall. The IRA aims to help US consumers and businesses become climate-smart through large subsidies in a number of areas. The US is now taking major steps towards meeting its commitments under the Paris Agreement that have a positive effect on the global climate. It is unfortunate, however, that the initiative discriminates against foreign production and most likely violates common trade rules.   

Companies with production in the EU will find it more difficult to export to the US, while companies that have or plan to establish production units in the US are likely to benefit from the subsidies offered by the IRA.

European and Swedish companies that are at the forefront of green technologies therefore do not all have the same opportunities to contribute.

In March, the actual implementation of the IRA is expected to be completed and a careful analysis of the impact of the law andand a dialogue with the US. The IRA is the third legislative package since 2021 aimed at strengthening US competitiveness, innovation and industrial productivity. Previously, there was an infrastructure initiative and the CHIPS & Science Act. The latter aims to increase investment in semiconductor manufacturing in the United States and promote the development of semiconductors, AI and quantum computing, among others. The investments in the three packages amount to two trillion dollars over ten years.

We do not want an arms race in state aid or a trade conflict across the Atlantic. State aid is generally problematic and risks leading to competition between countries with targeted subsidies and the risk of distorting markets that benefit neither American nor European companies in the long term. The EU should focus on creating favorable conditions and incentives instead of responding with the same coin. Relaxing state aid rules will not contribute to the EU losing the lead in productivity and competitiveness that we see across the Atlantic or in Asia.

It is important for the EU to take a long-term view to ensure that the right conditions are put in place in the EU for an innovative and competitive business sector and to remove barriers to the green transition.

Christina Ramm-Ericson
Head of Industrial Policy

Read what Anna Stellinger, Head of International and EU Affairs at the Confederation of Swedish Enterprise, has to say about the IRA and what alternative ways forward there are: https://www.tn.se/utrikes/25419/stellinger-om-usas-klimatpaket-behover-behalla-sans-och-balans/