So that Europe can keep up with the US, the European Commission has come up with a plan to speed up the production of electric cars and projects that use renewable energy.
The plan calls for green businesses to be able to get funding and follow rules that are easier to understand.
It would also loosen rules about how states help people.
The move came after the US said it would spend a lot of money on technologies that are good for the environment, like giving incentives for electric cars made in the US.
The International Energy Agency thinks that by 2030, the global market for mass-produced clean energy will triple to about $650 billion (£528 billion), and the number of manufacturing jobs related to this will double.
European leaders are worried that the $369 billion in investments that the US approved last year will hurt Europe’s economy as the industry grows and cause businesses to move to the US.
In the UK, Grant Shapps, who is in charge of business, said last month that the green subsidies could be the beginning of a “dangerous” slide toward protectionism.
Even though there has been criticism, such as claims that the US is breaking free trade rules, the White House hasn’t shown much interest in changing its plans, which US President Joe Biden has said are the key to getting the economy back on track.
The European Commission’s Green Deal Industrial Plan calls for reforming the bloc’s electricity market, working on other free trade agreements, relaxing rules on state aid, and letting bigger projects get help without having to go through extra approval steps.
But it will be hard to set up the program so that big economies like France and Germany feel like they will only benefit from some of the changes.
At a meeting later this month, the 27 people in the group will talk about the idea.
“State aid can’t make Europe more competitive,” said Margrethe Vestager, the executive vice president in charge of competition policy. But we need help to stop using fossil fuels quickly.
Electric cars subsidy could hurt trade
Business Secretary Grant Shapps has said that US President Joe Biden’s green subsidies could be the beginning of a “dangerous” move toward protectionism.
The $430 billion (£350 billion) plan includes tax credits for green technologies to encourage investment in the US.
Last month, International Trade Secretary Kemi Badenoch wrote to her US counterpart and said it would hurt many economies around the world.
The EU, Canada, and South Korea have all said that it breaks international trade rules.
The Inflation Reduction Act will encourage Americans to buy new and used electric cars, heat their homes with heat pumps, and cook with electric induction.
But the European Union has said that the package hurts competition and puts jobs in Europe at risk, especially in the energy and auto industries.
Mr. Shapps said on a panel at the World Economic Forum in Davos that the Act wasn’t meant to be protectionist, but that could happen if it isn’t changed.
Tariffs, quotas, or other rules limit imports from other countries. Usually, this is done to protect businesses and workers in the country from competition from other countries.
Some say that protectionism hurts international trade and drives consumer prices of electric cars.
Mr. Shapps said that the EU is a good trader worldwide. And want to open up the world as much as possible. So we must be very careful not to give in to protectionism.
But at a different meeting in Davos, Sir Keir Starmer of the Labour party said that the green subsidies of the Biden administration shouldn’t be seen as a problem but as “the single biggest opportunity” for a new economic strategy in the UK.
He said that the US plan was a “catalyst for all of us” to move towards the jobs and chances of the future.
Sir Keir said in September that he would start a company called Great British Energy to sell clean energy to the public if Labour won the next general election.
In December, Ms. Badenoch said that the Act would hurt the supply chains for batteries, electric cars, and other renewables.
Also, last month, the president of the European Commission, Ursula von der Leyen, said that the EU and the US needed to work together “to deal with some of the law’s most troubling parts.”
She asked the EU to change its rules on state aid so that the government is more likely to invest in green technologies to encourage the use of more electric cars.
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This latest fight between the US and the UK started when the US labor secretary, Marty Walsh, criticized a bill by the UK government that sets minimum service levels during strikes in some sectors, like ambulance, fire, and rail services.
In the Commons, Mr. Shapps explained the bill. It says that some workers would have to work even during a strike, and if they didn’t, they could be fired.