EU chief says bloc needs to address “distortions” created by Biden’s environmental policies

EU chief Ursula von der Leyen warned on Sunday that Europe must address market distortions caused by President Joe Biden’s Inflation Reduction Act (IRA), which heavily subsidizes green energy technologies.

Speaking to an audience at the College of Europe in the Belgian city of Bruges, von der Leyen said the EU must “take action to rebalance the playing field where the IRA or other action creates distortions”.

European Commission President Ursula von der Leyen attends the weekly European Commission meeting on November 30, 2022 in Brussels, Belgium. (Thierry Monasse/Getty Images/Getty Images)

The IRA, passed in August, is boosting the U.S.’s transition to a low-carbon economy with tax cuts on U.S.-made electric cars and batteries and some $370 billion in green energy subsidies.

Von der Leyen said the EU needs to work with the US “to address some of the most worrying aspects of the law,” but she qualified that Brussels needs to “adjust” its own rules to encourage public investment in green tech and “[reassess] the need for further European financing of the transition.”

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Her comments echo those of other European business and political leaders who have criticized the IRA as “protectionist”.

Last week, French President Emmanuel Macron, who was on an official state visit to Washington, complained that subsidies designed to incentivize semiconductor production for electric vehicles had unfairly disadvantaged European industry.

While applauding the government’s efforts to curb climate change, he said the subsidies, such as those envisaged in Biden’s inflation-cutting law, would represent a huge setback for European companies.

Joe Biden Emmanuel Macron

President Joe Biden listens as French President Emmanuel Macron speaks at a state dinner at the White House December 1, 2022. (AP Photo/Andrew Harnik/AP Newsroom)

“The choices that have been made… are choices that will fragment the West,” Macron said. He said the legislation “creates such disparities between the United States and Europe that it affects all those who work in many companies [in the U.S.]they’ll just think, ‘We’re not investing on the other side of the Atlantic anymore.'”

In a LinkedIn post earlier this week, Volkswagen CEO Thomas Schäfer lamented that Germany and other European nations are “rapidly losing their attractiveness and competitiveness” while countries like the US, Canada and China are “moving forward”.


“We have no time to lose,” Schäfer wrote. “The EU urgently needs new investments to avert creeping deindustrialization and to maintain Europe’s attractiveness as a location for future technologies and jobs!”

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