How Europe Should Answer The US Inflation Reduction Act

In this new paper from Bruegel, the authors explain the green subsidies in the US Inflation Reduction Act and recommend actions the EU might consider to respond to those subsidies. They explain why certain policy responses – like loosening state aid – might be counterproductive for the EU, and point out that existing EU green subsidies are quantitatively similar to those introduced in the IRA. Long paper, but the thorough analysis is clearly presented and worth reading. It even has a handy annex explaining WTO subsidies rules for those wanting to better understand why many consider the IRA to be WTO-inconsistent. Read more about this paper here.