Biden, EU leader launch talks to ease rift on EV subsidies
WASHINGTON (AP) — In a potential boost for electric vehicles, President Joe Biden and European Commission President Ursula von der Leyen said Friday they’ve agreed to open negotiations on the use of European minerals critical in the production of batteries for EVs that are eligible for U.S. tax credits.
The two sides agreed to start talks on easing differences between the U.S. and European Union over electric vehicle tax credits included in Biden’s roughly $375 billion clean energy law that passed last year. The legislation includes incentives for the purchase of vehicles — if they are largely manufactured in the United States.
After her meeting with Biden, von der Leyen said if the deal is completed it will lead to critical raw materials sourced in the European Union being treated as if they were sourced in the United States
“It is important on both sides of the Atlantic to know what kind of incentives are being given to the clean tech industry, to make sure that we join forces to boost the clean tech industry,” she said. “That is crucial and paramount for reaching a circular economy, a net zero economy.”
Biden at the start of the meeting said it was important that both sides are “driving new investments to create clean energy industries and jobs and make sure we have supply chains available” for both continents.
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Biden and von der Leyen also used their Oval Office meeting to discuss Western coordination to support Ukraine in the war against Russia, joint efforts to decrease Europe’s dependence on Russian fossil fuels and the Biden administration’s concerns about some of China’s economic practices.
White House officials said they plan to consult members of Congress, labor groups and others with a stake in the outcome as they negotiate on EV materials with the European Commission.
Von der Leyen and other European leaders have voiced opposition to incentives in the Inflation Reduction Act that Biden signed in August that favor American-made electric vehicles. The legislation stipulates that for U.S. consumers to be eligible for a tax credit of up to $7,500 on their EV purchase, the EV’s battery must largely contain minerals from the U.S. or a country with which the U.S. has a free-trade agreement. Additionally, 50% of components in batteries must be manufactured or assembled in North America by 2024, with that percentage rising gradually to 100% by 2028.
The European Commission, in part, responded by launching its own Green Deal Industrial Plan l ast month. The measure is expected to make it much easier to push through subsidies for green industries and to pool EU-wide projects.
“I think it’s great that there is such a massive investment in new and clean technologies now,” von der Leyen said, referring to the U.S. Inflation Reduction Act. “Indeed, we want to match it with the Green Deal Industrial Plan.”
James Batchik, assistant director of the Europe Center at the Atlantic Council, said the U.S. and EU “getting on the same page” is an important step “to avoid a subsidy war.”
Still, a resolution will depend on the details of any future agreement, Batchik said.
Biden had stood by the U.S. policy that favors American EVs when French President Emmanuel Macron, a critic of the legislation, visited Washington late last year. Biden, however, acknowledged “glitches” in the legislation and said there were “tweaks we can make” to satisfy allies.
Ensuring access to critical minerals has crucial at the White House as administration officials aim to promote American electric vehicle manufacturing and other clean energy technologies.
Biden last year announced he was using the Defense Production Act to boost production of lithium and other minerals used to power electric vehicles. Experts said that move by itself was unlikely to ensure the robust domestic mining the Democratic president seeks.
Biden’s order directed the Defense Department to consider at least five metals — lithium, cobalt, graphite, nickel and manganese — as essential to national security and authorized steps to bolster domestic supplies.
As for Ukraine, the U.S. and the EU have remained largely together throughout the Russian war, coordinating sanctions against Moscow and the delivery of weaponry to Kyiv. The leaders following Friday’s Oval Office said in a joint statement they remained committed to ensuring “that Ukraine has the security, economic and humanitarian support it needs for as long as it takes.”
The White House in recent weeks has repeatedly pointed to U.S. intelligence showing that China is considering sending weapons to Russia to help prosecute the war in Ukraine.
The U.S. says Beijing has yet to deliver weapons to Russia but is more seriously weighing the prospect as Russia has burned through ammunition in a conflict that has gone on much longer than Russian President Vladimir Putin anticipated.
European nations have had a less adversarial relationship with China than the U.S. has, but that has been evolving since the start of the war.
This week the Dutch government announced it would join the U.S. in imposing export restrictions limiting China’s access to materials used to make advanced processor chips. In a speech before the German Parliament last week, Chancellor Olaf Scholz called on China to “use your influence in Moscow to press for the withdrawal of Russian troops, and do not supply weapons to the aggressor Russia.”
Washington has long argued that Beijing’s subsidies in the Chinese tech sector, its pressuring of foreign companies to share trade secrets and intellectual property with Chinese corporate partners, and other practices have created an uneven economic playing field.
The leaders in their joint statement said that the EU-U.S. Trade and Technology Council would share information “on non-market policies and practices of third parties—such as those employed by the People’s Republic of China.”
Associated Press writer Fatima Hussein contributed reporting. Casert reported from Brussels.