President Joe Biden’s plan to subsidize clean energy is “dangerous” and risks pushing the world toward protectionism, Britain’s Business Secretary Grant Shapps said, in the UK’s bluntest criticism to date of the US Inflation Reduction Act.
European Union leaders say the US legislation will unfairly benefit American firms and violate World Trade Organization rules. To date, Prime Minister Rishi Sunak’s administration has stayed relatively quiet on the issue, despite recent warnings from inside his own Conservative Party that the UK risks missing out on the economic opportunities of the green energy transition. But at the World Economic Forum in Davos, Switzerland, Shapps on Thursday indicated Britain shares the EU’s concerns while appearing reluctant to respond with its own protectionist measures.
“Its very important we don’t slip into protectionism and that is where at the edges, the Inflation Reduction Act in the US is dangerous because it could slip into protection,” Shapps said in a panel discussion. “It’s not its intention, I don’t think its necessarily where it is going but if its not amended...I think that’s where we have to be really careful.”
The legislation, a key component of Biden’s agenda, includes energy tax credits, climate programs and environmental mandates which European leaders are concerned will lure investment that would otherwise flow to Europe. This month, European Commission President Ursula von der Leyen responded by unveiling a “Net-Zero Industry Act” aimed at increasing funding for green technologies.
Instead, the UK is continuing to privately express its concerns with the US. Trade Secretary Kemi Badenoch met her US counterpart on Wednesday to discuss concerns about a global subsidies race and agreed to keep a close dialog to mitigate the act’s impact.
Opposition Labour party leader Keir Starmer and shadow Chancellor Rachel Reeves also expressed concern at the “phenomenal impact” of Biden’s bill this week.
Other countries could “steal a march on us and we’ll find in 20 years’ time we are importing all our cars, all of our steel, because we failed to seize that opportunity,” Reeves told the Financial Times.
