Business | Shock therapy

What European business makes of the green-subsidy race

A lesson from America’s Inflation Reduction Act is that size isn’t everything

Ursula von der Leyen, president of the European Commission, at a news conference unveiling the Green Deal Industrial Plan at the European Commission headquarters in Brussels, Belgium, on Wednesday, Feb. 1, 2023. The European Union unveiled a roadmap for how it plans to keep its industries competitive as the bloc tries to catch up to the US and China, which offer huge subsidies to domestic green technologies. Photographer: Valeria Mongelli/Bloomberg via Getty Images

Feb 14th 2023|Berlin

Last summer European leaders began hearing a huge sucking sound. The source of the din? The Inflation Reduction Act (IRA), a 725-page law passed in August to speed up American decarbonisation. Europe’s budding clean-tech industry, they feared, would be hoovered up across the Atlantic by the promise of handouts, which amount to around $400bn over ten years. To stop this happening, some EU politicians argued, the bloc would have at the very least to match the IRA’s sums.

This article appeared in the Business section of the print edition under the headline “Shock therapy”