Publications Public finance Europe

How the EU can match the US Inflation Reduction-Act

Last August, the US Congress adopted the Inflation Reduction Act (IRA). It became the epicentre of EU fears of seeing cleantech projects, like battery or solar panel gigafactories, settling in the US rather than in the EU. There is some rationality behind that fear. The IRA indeed provides sizable public funding, with 10 years predictability and the simplicity of having a single federal level scheme. Moreover, the IRA does not only subsidize cleantech manufacturing. For instance, in the case of electric vehicles, the IRA supports the mining of critical minerals, the manufacturing of the battery, the purchase of the electric car and the production of renewable electricity. In other words, with IRA the US now has a genuine long-term climate investment plan.

 

The IRA is a wake-up call for the EU, as is China’s Five years Plan and Japan’s 20 trillion Yen Green Transformation Programme. Let’s be clear. Seeing major Governments organising long-term climate investment plans is great news for climate action. In our latest brief published today, I4CE argues that the logical solution is an EU long-term climate investment plan. Yet, there is currently little political appetite for such a discussion. The Institute therefore recommends the European Commission to use the existing political momentum around the IRA and cleantech, to propose an EU Cleantech Investment Plan that focus on the scale-up and manufacturing of key clean technologies. The EU should scale green public procurement and launch EU-wide support schemes, as part of this plan.

 

Today the 27 Heads of States and Governments of the EU reconvene for a Special European Council. They should use this opportunity to provide political backing to an EU cleantech investment plan, and task their ministers to map and assess their own national schemes to identify synergies and gaps. This would help the European Commission design its Net-Zero Industry Act, tabled for 08 March 2023. However necessary, such Cleantech Investment Plan should only be the first step for a wider discussion. The EU needs to build a long-term climate investment plan that tackles all climate investment needs, such as public transport infrastructure or targeted support for low-income and middle-class Europeans. This is crucial to ensure EU, national and private investments turn all the European Green Deal objectives into tangible realities for businesses, workers and families.

 

Read the newsletter

To learn more
  • 05/06/2024
    Appendix tools – Social and Climate Budget Tagging: Insights from Indonesia

    Lorem ipsum dolor sit amet, consectetur adipiscing elit. In suscipit vitae turpis id dignissim. Aenean aliquet quam ac volutpat convallis. Nullam dignissim quis libero eget tempus. Vestibulum cursus odio venenatis, scelerisque augue ac, eleifend leo. Vestibulum sagittis blandit ipsum a ornare. Donec non erat at mauris scelerisque dignissim a sit amet orci. Quisque viverra venenatis magna, vel pharetra tellus laoreet accumsan. Integer vulputate malesuada suscipit. Integer rhoncus, dolor sed facilisis posuere, velit augue lacinia lacus, id fermentum est nulla sodales orci. Quisque et suscipit turpis, sed blandit augue.

  • 02/23/2024 Foreword of the week
    European climate investments must double to hit 2030 EU targets

    This week, I4CE launches the first European Climate Investment Deficit report. During a year’s research, we analysed investments in 22 sectors of the EU27 economy that are critical for the EU to deliver its 2030 climate and energy security objectives. The European Green Deal is gaining economic momentum, as climate investments in the EU grew 9% in 2022, reaching […]

  • 02/21/2024
    European Climate Investment Deficit report: an investment pathway for Europe’s future

    Climate investments in the EU economy grew by 9% in 2022. This report finds that the European Green Deal is gaining economic momentum but investments in modernising energy, transport, and buildings must still double for the EU to hit 2030 climate targets.

See all publications
Press contact Amélie FRITZ Head of Communication and press relations Email
Subscribe to our mailing list :
I register !
Subscribe to our newsletter
Once a week, receive all the information on climate economics
I register !
Fermer