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A US Inflation Reduction Act for Europe

By Tom Krebs

10 Jan 2023 · 3 min read

Editor's Note

An economist argues why the U.S. Infation Reduction Act is a step in the right direction as compared to Europe's market-based approach and how Europe has an advantage in terms of wage laws.

MANNHEIM – The United States’ recently enacted Inflation Reduction Act (IRA), which includes hundreds of billions in federal subsidies for green technologies and renewable energies, marks a long-overdue shift in US climate policy. But while the US decision to join the global fight against climate change has been well received in the European Union, some leaders have voiced concerns that the bill focuses too much on domestic production and might discriminate against EU-based companies.

In a recent policy paper, I argue that Europe should not resist the new US approach to climate policy. Instead, European countries should welcome it and develop a better version of their own.

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