In Davos, Americans praise the IRA, their plan hated by Europeans

In Davos, Americans praise the IRA, their plan hated by Europeans

In front of the convention center in Davos, Switzerland, where the World Economic Forum takes place. ARND WIEGMANN / Portal

Joe Biden’s cabinet ministers and congressional elected officials oversee the massive green tech subsidy program.

IRA. This acronym is probably the most quoted acronym at the World Economic Forum in Davos, at least by European and American participants. This refers to the Inflation Reduction Act, a plan passed by the US Congress last summer that massively supports the energy transition with subsidies of 369 billion dollars.

In Davos, the Europeans, commissioners and ministers, are debating their preparatory counter-offensive in the face of what they see as unfair competition that could suck up investments in electric cars or renewable energies in America.

The well-stocked American delegation, made up of big bosses, ministers, MPs and even governors, proudly supports the IRA. “The IRA will enable the United States to lead the energy transition and create good-paying, skilled jobs,” said Biden Labor Secretary Martin Walsh. But when asked about possible adjustments or concessions that could be discussed with the Europeans, the minister replies: The issue does not fall within his remit and he was not informed by the White House, he admits.

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“A true transformative force” of the economy

“We rightly criticized Americans for not doing anything about climate change, now they are stepping in,” comments a big French boss. They are not doing it against Europe, but for themselves, he believes. Vicki Hollub is one of those industrialists on the other side of the Atlantic who welcome the federal subsidy program. She is CEO of Occidental Petroleum and has dedicated her oil company to the energy transition. “The IRA will subsidize lithium batteries and carbon capture and storage (CCS). We plan to capture 100 million tons of CO2 by 2035 and the IRA will help us with that,” explains the chief. “I say thank you Manchin!” West Virginia Democratic Senator Joe Manchin carried the IRA’s text, he who a few months earlier had been hostile to solar cell subsidies. The decisive factor was the conversion of this elected official from a state dependent on coal. Joe Manchin is also in Davos, where he stresses that “the IRA is helping us to consolidate our energy independence”.

“The IRA has a real transformative power” of the economy, supports at his side Larry Fink, head of Blackrock, the largest wealth manager in the world. Businesses around the world are looking to the United States.”

At the end of last year, a high-level working group was set up for discussion between the two sides of the Atlantic. But the Davos Forum facilitates informal exchanges between stakeholders keen to have their views heard. Joe Biden’s trade representative, Katherine Tai, is expected to meet a number of European ministers and senior officials at a dinner on Wednesday, including Commission Vice-President Valdis Dombrovskis and ECB President Christine Lagarde.