US President Joe Biden and European Commission President Ursula von der Leyen met on Friday to try to finalize a plan the White House hopes will turn the page on a squabble between the US and the European Union over tax credits on electric vehicles.
Biden and von der Leyen have opened negotiations between Washington and Brussels on a deal that could increase the use of key European minerals in the production of batteries for electric vehicles that are eligible for US tax credits through Biden’s energy bill clean of about 352 billion euros approved last year.
Biden, hosting von der Leyen in the Oval Office, said the alliance to support Ukraine heralded “a new era”.
However, tensions are swirling in Europe over the Biden administration’s historic Inflation Reduction Act (IRA), a government spending spree that supports US production of climate-friendly technologies.
Speaking to reporters outside the White House after the meeting, von der Leyen said: “Today we agreed that we will work with critical raw materials that have been sourced or processed in the European Union and give them access to the American market as if they had been purchased in the American market.”
Inflation-reducing legislation stipulates that if U.S. consumers want to be eligible for a tax credit of up to €7,043 on their EV purchase, the EV battery must contain largely U.S. or foreign sourced minerals. a country with which Washington has a free trade agreement.
Additionally, 50% of battery components are to be manufactured or assembled in North America by 2024, with that percentage gradually increasing to 100% by 2028.
The European Commission has, in part, responded by launching its own Green Deal business plan last month in response to Biden’s legislation. The measure should make it much easier to pass subsidies for green industries and pool projects at EU level.
“I think it is very important for us … to join forces because it is fundamental for our future to fight climate change and limit global warming,” von der Leyen said.
“So it was and is important for us to join forces, to be complementary, to boost the respective cleantech industry on both sides,” he added.