IRA vs. Green Deal: The New Transatlantic Industrial Diplomacy
As Washington deploys the Inflation Reduction Act, how is Europe responding? An analysis of the impacts for industrial companies operating on both continents.
Category
Industry, USA, Europe, Energy
Date
Oct 12, 2024
The End of Trade Naivety: Europe Facing American Protectionism
On August 16, 2022, the signing of the Inflation Reduction Act (IRA) by Joe Biden marked a brutal paradigm shift. By injecting $369 billion in subsidies, the United States didn't just accelerate its energy transition: it redrew the rules of global competition. For European decision-makers, the question is no longer whether to react, but how to navigate this regulatory fragmentation.
Strategic Comparison: Subsidy vs. Regulation
Where Washington bets on massive tax incentives (the "carrot"), Brussels has long favored binding standards (the "stick"). This cultural gap is now creating major distortions in competition.
Criteria | 🇺🇸 USA (Inflation Reduction Act) | 🇪🇺 UE (Green Deal / NZIA) |
|---|---|---|
Philosophy | Immediate Tax Credits (OPEX) | Project Subsidies & Standards (CAPEX) |
Conditionality | "Local Content" (Made in USA) | Strict Environmental Criteria |
Speed | Immediate (Fiscal Window) | Slow (Complex Admin Processes) |
Risk | Trade War (WTO) | Industrial Offshoring |
Impact on the Value Chain: The Risk of Decoupling
As regularly highlighted by the International Energy Agency, securing critical metals is the sinews of war. European companies find themselves caught in a vice:
On one side, the allure of American subsidies sucking in investments (particularly in hydrogen and batteries).
On the other, the complexity of the European Net Zero Industry Act, which struggles to offer equivalent visibility.
“In this context of a subsidy war, the only adjustment variable for a multinational corporation becomes its ability to influence the standard before it is voted on. Regulatory anticipation is no longer an option; it is a strategic asset.” — Nicolas Franchinard, Founder.
What Strategy for Industrial Players?
It is no longer about choosing a side, but optimizing presence on both fronts. An effective public affairs strategy must now integrate mirror legislative monitoring: scrutinizing the US Congress with the same acuity as the European Commission.
