Breaking News
Investing Pro 0
⏰ React to the Market Faster with Custom, Real-Time News Get Started

France, Germany test water on US green subsidies

Stock Markets Feb 02, 2023 08:29AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
2/2 © Reuters. FILE PHOTO: German Economy and Climate Minister Robert Habeck gestures as he speaks during a joint news conference with French Economy and Finance Minister Bruno Le Maire (not seen) at the Bercy Ministry in Paris, France, February 7, 2022. REUTERS/Sarah M 2/2
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio

By Christian Kraemer and Victoria Waldersee

BERLIN (Reuters) - Germany's Economy Minister Robert Habeck and French Finance Minister Bruno Le Maire will head to Washington next week to press concerns about U.S. climate subsidies and urge a favourable treatment of European businesses.

While European leaders welcome the new impetus towards green energy transition given by the Biden administration's so-called Inflation Reduction Act, they also fear that the $369 billion of subsidies largely targeting North America-based manufacturers could lure companies away from Europe.

Some in Europe argue the subsidies breach World Trade Organization rules, but there is no appetite for a trade war with the United States and a recognition that Europe's best hope lies in influencing how the scheme is applied in practice.

"From the point of view of German industry, it is important the implementation guidelines of the U.S. authorities now avoid discrimination as far as possible," said Tanja Goenner, general director of Germany' BDI industry association.

Habeck and Le Maire are due to meet U.S. counterparts on Tuesday, two days before an EU summit where leaders will study plans to boost state aid and other moves to allow Europe to compete as a hub for electric vehicles and other green products.

"The special summit in February should send the signal that the European response to the U.S. IRA will be a European IRA, comparable in instruments, scope and measures," a Volkswagen (ETR:VOWG_p) spokesperson said.


The discussion around IRA in Germany focuses on potential disadvantages for a local automotive industry that has been the backbone of Germany's exporting success for decades but which now faces an unprecedented challenge from the shift away from fossil fuels.

Under IRA, new electric vehicle tax credits apply to those with final assembly as well as key inputs made in North America, which includes Canada and Mexico - countries that have free trade pacts with the United States.

One focus of the Franco-German trip is to seek treatment for Europe comparable to that for Mexico and Canada, a senior EU official said.

"If Ministers Habeck and Le Maire succeeded in doing that, it would be a great success," Mercedes-Benz's head of external affairs said.

The U.S. Treasury Department said in December that electric vehicles leased by consumers could qualify for up to $7,500 in commercial clean vehicle tax credits, a decision that would make those assembled outside North America eligible. One goal of the Washington visit is to confirm that is indeed the case.

Still, while the potential for leased European vehicles to be covered by the subsidy is welcome, it would only apply to a portion of European vehicle exports, said Hildegard Mueller, president of Germany's VDA auto association.

Experts estimate that about half of the German electric vehicles registered in the United States are leased.

While the scale of the U.S. subsidies has attracted most attention, the EU has large potential resources of its own. A German government source said an initial analysis showed they could even be comparable to those available under IRA.

Chancellor Olaf Scholz said last month almost 180 billion euros would be available for 2023-2026 under the German climate and transformation fund, a supplementary budget to push green investments, while the IRA's $369 billion covers 10 years.


"The amounts of subsidies in Europe are in line or even more than those in the United States, that is not the problem," said one senior European Union official.

"The real problems are the incentives to make firms move production to the United States," said the official, referring to the local content requirements.

Yet, Europe's carmakers insist there is a risk that business will be tempted to shift towards the United States as the U.S. provisions combine with other production factors to make Europe look less attractive.

"Due to the IRA and the very high electricity and energy prices, especially in Germany, Europe is becoming less and less competitive," a spokesperson for Volkswagen said.

To ensure Europe can compete with the United States, the European Commission on Wednesday proposed measures including loosening EU state aid rules and repurposing existing EU funds.

    VDA's Mueller said it was crucial the "EU Green Deal Industrial Plan" could be "implemented quickly and unbureaucratically." 

France, Germany test water on US green subsidies

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your profile, will be public on and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email