The European Union called on the U.S. to amend new green legislation given what it called the law’s discriminatory subsidies, warning of potential retaliation. The head of the WTO called for talks to avoid a “subsidy war.”
Provisions in the recently enacted Inflation Reduction Act included tax credits for electricity from certain renewable resources, sustainable aviation, production of hydrogen, clean vehicles, advanced manufacturing production, and clean fuel production.
Japan joined the EU in calling planned U.S. aid for local electric-vehicle manufacturers “discriminatory” and demanded equal treatment for the nation’s car makers.
The First Chess Move
Japanese automakers may hesitate to invest in the electrification of vehicles in the world’s largest economy if the U.S. offers “discriminatory incentives” to local manufacturers, Japan’s government said in a statement dated Friday.
“This could cause negative impacts on the expansion of investment and employment in the U.S.,” it said in the statement.
Industry Responds
Car giants such as Ford and Toyota say the government should loosen the terms of the climate and tax law to allow manufacturers to source EV components from more places.
The EU also submitted a document to the U.S. late on Friday after officials met in a bid to head off a potential trade war. EU officials had said that the bloc wants to resolve the dispute in an amicable manner, but that Europe should use all tools available to address what it calls unfair subsidies, including by bringing a case to the WTO.
Poor Countries Need $2 Trillion A Year
The news comes as a new report presented in Egypt at the COP27 on Tuesday finds poor countries need $2 trillion a year to help them cut their greenhouse-gas emissions and cope with the effects of climate change.
Around half of that amount would have to come through external financing, mostly from the private sector, it said, and it urged rich countries to ramp up the grants and loans they provide.
More on climate:
How USDA’s $2.8 Billion Climate-Smart Investment Might Impact Your Operation
Seeding The Sky: Can Scientists Manipulate The Weather To Benefit Agriculture?
New Data Shows Ag’s Climate Footprint is Shrinking
