A visitor takes photos of flowers exhibited during the International Green Week (IGW) Berlin in Berlin, Germany, Jan. 20, 2023. (Photo by Stefan Zeitz/Xinhua)
The U.S. Inflation Reduction Act does not aim to target Europe, but it in fact has hurt Europe. As more European companies are tempted to produce in the United States, Europe's green plan has suffered major setbacks.
by Wang Shuo
Green industry has been hot topics recently in Europe, as European politicians worry that the U.S. Inflation Reduction Act, which includes green incentives and tax breaks to companies producing in the United States, will disadvantage European firms and lure them to move to America. France and Germany's economy ministers protested those U.S. green subsidies on their Washington trip last week.
Europe's concern about green industry is not on a whim, but out of long-term consideration. Europe is a highly developed economy, but with weak growth momentum. That is resulted from multiple factors, including the dematerialization of industries, an aging population and insufficient technological innovation. But the core problem is the lack of a new engine for economic growth.
Compared with China and the United States, Europe has no comparative advantage in the traditional manufacturing sector, and failed to catch up with the trend of digital technology. However, in green industry, energy-poor Europe has been a forerunner, with rich experience. That is why Europe has viewed green industry as a pillar of its future development, especially after the energy crisis brought by the Russian-Ukrainian conflict.
Meanwhile, promoting green industry embodies Europe's political ambition. Compared with hard power such as military power, Europe has always attached importance to soft power, especially so-called normative power, which is the ability to influence and shape the behaviors of other international actors by formulating rules. Whoever dominates the rules will have a larger say. In 2005, Europe launched the EU Emissions Trading System (ETS). In 2012, the ETS was extended to cover aviation, charging airlines for their carbon emissions.
La Defense business area is pictured in Paris, France, Feb. 1, 2023. (Xinhua/Gao Jing)
Obviously, green industry is a priority in Europe's development strategy. When the European Commission presented the European Green Deal in 2019, European Commission President Ursula von der Leyen said: "We will help our economy to be a global leader by moving first and moving fast."
"By showing the rest of the world how to be sustainable and competitive, we can convince other countries to move with us," she said.
The U.S. Inflation Reduction Act does not aim to target Europe, but it in fact has hurt Europe. As more European companies are tempted to produce in the United States, Europe's green plan has suffered major setbacks. During his visit to the United States last year, French President Emmanuel Macron criticized the green package. However, the chance of America changing its mind is slight.
The United States has always put itself first. In this regard, there is no difference between the administration under President Joe Biden and that of former President Donald Trump. Washington will never sacrifice its interests for the sake of others, including its allies. The United States has supported Europe in many cases, but its purpose is to make Europe better serve the American hegemony.
This time, even if the United States makes a concession to Europe, Europe must give up something for exchange. That might be Europe's further involvement in the Russia-Ukraine conflict, or following America more closely to contain China. For Europe, the price is too high.
Editor's note: Wang Shuo is a professor at the School of International Relations of Beijing Foreign Studies University.
The views expressed in this article are those of the author and do not necessarily reflect the positions of Xinhua News Agency.■
