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Key EU response unlikely to soothe industry concerns

Tuesday, February 21, 2023

Significance

The proposals are the EU’s response to the Inflation Reduction Act (IRA) announced by the US government in August. Thus far, IRA subsidies appear to be encouraging major businesses to relocate investments to the United States in areas such as battery production.

Impacts

  • A US Republican president from 2025 could decide to reduce or alter spending in IRA subsidies, given the latter’s climate change focus.
  • The EU will likely allow states to amend their recovery plans to focus their investments more on the energy crisis and green energies.
  • If US and EU investment promotes a breakthrough for green hydrogen, it would further reduce EU energy dependence on Russia.

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