US president Joe Biden and European Commission president Ursula von der Leyen agreed last Friday that they would enter talks regarding critical minerals.
The pair met at the White House amid EU complaints that the US Inflation Reduction Act (IRA) is driving trade away from the bloc.
The IRA offers subsidies for companies whose clean energy production takes place in the US.
Biden’s $430bn billion law has seen support from large energy companies incorporating clean energy production into their work. Exxon CEO Darren Woods claimed that the oil giant was revaluating its European strategy due to “punishing” taxation last week. He compared the EU’s policy unfavourably to that of the US, where Exxon has already benefitted from the IRA.
The passing of the IRA has prompted anger among some EU officials, and von der Leyen has claimed that it is hurting the European economy as competition for electric vehicle (EV) production grows.
During a round table at Davos Czech industry minister, Jozef Síkela said that he “understands the importance of the IRA from the US perspective but on the side of Europe it is seen as much more controversial […] It is saying to European investors ‘go to the US, because it is more profitable to you’”.
Biden seeks to address European concerns while maintaining the law, which was a huge political success for his administration.
“Diversified and developed with trusted partners”
Biden and von der Leyen have said in a joint statement that they will “immediately” begin critical mineral talks, which will ensure that minerals extracted or processed in the EU will count towards the clean vehicle tax under the IRA.
Their statement said: “Cooperation is also necessary to reduce unwanted strategic dependencies in these supply chains, and to ensure that they are diversified and developed with trusted partners”.
Europe is currently responsible for a quarter of global EV production, while the US plays a smaller role accounting for 10% of EV production and 7% of battery production, according to the International Energy Agency.
Last month the EU announced its Green Deal Industrial Plan, in response to the IRA, which offers financial support for the development of technology necessary to the net-zero transition. The plan is complemented by the Critical Raw Materials Act which seeks to ensure access to minerals needed for the green transition.