Biden's green energy initiative gets the EU's attention
Biden's green energy initiative gets the EU's attention
A good idea on a big scale can be extremely useful. Even if it breaks the narrow mold of conservatives stuck in their favorite economic dogmas.
Sylvia Wörgetter1 reports:
[S]ince the beginning of the year, US President Joe Biden has pumped a total of 369 billion dollars (341.3 billion euros) into green key technologies in the form of subsidies and tax breaks. From a European point of view, this basically overdue catching-up to US climate policy has an unpleasant side effect. Biden's Inflation Reduction Act [IRA] follows a motto from Donald Trump's time: "America First." Only those who produce batteries, wind turbines, solar modules or semiconductors in the USA can enjoy the rain of dollars. In Europe, therefore, there are fears that companies could relocate their production to the USA.
The EU Commission wants to counter the race for green technology leadership with a large-scale industrial plan. It puts the state in the center – similar the USA and China. The ever more rapid return of subsidies marks a farewell to everything that has hitherto been sacred to Brussels. [my emphasis]
As the DW News report above notes, the new EU idea is not a funded new program. It’s rather a plan that recognizes that the previous neoliberal globalization model just isn’t working out the way the international-trade utopians claimed it would. To maintain the “national competitiveness” that has been the Holy Grail of neoliberal ideology, and to manage the economy so that we don’t burn up the planet with fossil fuels -well, it looks like the national governments with need some (gulp!) economic planning because the magical power of the Free Market and its Invisible Hand to take care of it all seems to be lacking.
This EU initiative has provoked some entertainingly silly responses, e.g., this from Politico EU: “‘Like Marx on steroids:’ EU governments slam subsidy plan.”2
Credit for that line goes to the Dutch Ambassador to the EU: “A wide range of EU ambassadors hit out at those draft conclusions in a meeting last week, four EU diplomats told POLITICO. In the meeting, Dutch Ambassador Robert De Groot slammed Michel’s pitch as ‘Karl Marx’ on steroids, according to three of the diplomats.“
Yes, as soon as someone starts talking about anything that might reduce the profits of fossil fuel barons by a nickel at some time in the future, the lobbyists conjure visions of eminent Bolshevization. But EU Commission President Ursula von der Leyen as the reincarnation of Rosa Luxemburg on the verge of expropriating the expropriators? Even by hysterical standards, that’s pretty creative. Von der Leyen is a German politician from the conservative Christian Democratic Union (CDU) party. A more safely establishment figure would be hard to imagine.
But let’s get real. Public subsidies for favored industries, subsidies which often take the form of tax breaks, isn’t a Marxist idea. Not even a social-democratic idea. Ever heard of the oil depletion allowance? “Proponents of the depletion allowance claim that special treatment for the oil and gas industry is justified because of the high risks involved and because reliable oil supplies are vital to national defense.“3
This almost sounds like what conservatives call “the gubment picking winners and users” in the economy - when they are against the subsidy in question:
Oil companies [in the US] can—and often do—defer federal tax payments. A report published by Taxpayers for Common Sense in 2014 revealed that, from 2009 and 2013, through numerous tax provisions in the tax code granting special status to oil companies, the 20 largest oil and gas companies were able to defer payments on up to half of their federal income taxes. These companies paid 11.7% of their pretax income, which is 23.3 percentage points less than required of most other corporations.4 [my emphasis]
BTW, the oil subsidies in the US began long before either Charles Lindbergh or Donald Trump started talking about “America First.”
But it is an important recognition that subsidizing and promoting an industrial adjustment that limits and could eventually undo a lot of the damage the historically heavily-subsidized fossil fuel industry is doing to the climate is a good thing to do.
And it’s notable because Biden’s green subsidies in the IRA and the measures the EU is discussing in response have been considered “uncompetitive” and therefore sinful in the Neoliberal Gospel up until now. This is a hopeful sign.
And it's a good thing if the EU doesn’t want to get left behind on green energy5:
However, there are concerns that these foreign subsidy schemes could encourage green industries to relocate their production to other countries [outside the EU]. This would increase Europe's dependence on other states. In addition, many jobs in the industry could be lost due to a possible exodus.
Against this background, the [European] Commission has presented a "Green Deal Industrial Plan" to ensure that the production of these key technologies will also take place in Europe.
Yes, the EU has picked up the “green deal” terminology. And, gosh, it seems like just yesterday that House Speaker Nancy Pelosi was mocking the whole concept: “The green dream, or whatever they call it, nobody knows what it is, but they’re for it, right?”6 But that was four years ago, which can count as entire era ago in politics!
(All translations from the German here are mine.)
Wörgetter, Sylvia (2023): Europas Antwort auf "America first". In: Oberösterreichische Nachrichten 01.02.2023. <https://www.nachrichten.at/wirtschaft/europas-antwort-auf-america-first;art15,3783544> (Accessed: 2023-02-01).
Stolton, Samuel & Moens, Barbara & Lombardi, Pietro (2023): ‘Like Marx on steroids:’ EU governments slam subsidy plan. Politico 01/30/2023. <https://www.politico.eu/article/like-marx-on-steroids-eu-governments-protest-state-aid-push/> (Accessed: 2023-02-01).
Depletion allowance (2022): Britannica Online 12/30/.2022. <https://www.britannica.com/topic/depletion-allowance> (Accessed: 2023-02-02).
Palmer, Barclay (2022): How Oil Companies Pay Such Low Taxes 08/17/2022. Investopedia. <https://www.investopedia.com/articles/investing/011216/understanding-how-oil-companies-pay-taxes.asp> (Accessed: 2023-02-02).
Packroff, Jonathan (2023): Globaler Subventionswettlauf: EU stellt grünen Industrieplan vor. Euroaktiv 01.02.2023. <https://www.euractiv.de/section/all/news/globaler-subventionswettlauf-eu-stellt-gruenen-industrieplan-vor/> (Accessed: 2023-02-01).
Cillizza, Chris (2019): Nancy Pelosi just threw some serious shade at Alexandria Ocasio-Cortez’s ‘Green New Deal’. CNN Politics 02/08/2019. <https://edition.cnn.com/2019/02/07/politics/pelosi-alexandria-ocasio-cortez-green-new-deal/index.html> (Accessed: 2023-02-02).