Clean tech subsidies and Ukraine to be main topics as von der Leyen meets Biden

Ursula von der Leyen and Joe Biden will meet on Friday at the White House with their respective plans to boost homegrown clean technology high on the agenda. 

Both the EU and US have unveiled plans to boost the production of clean technologies in the coming decades to ensure they reach carbon neutrality by the mid-century point and capture crucial market shares in the increasingly important sector.

But the US’s plan to lavish $369 billion of subsidies over the coming decades on American-made products, called the Inflation Reduction Act (IRA), has irked the EU which bemoans some of it as discriminatory. A special task force to resolve the two sides’ differences have been set up to avoid the risk of a subsidy race.

The two leaders are expected to advance talks over the EU’s bid to acquire a so-called Free Trade Agreement (FTA) equivalent. This is because Washington’s IRA grants exemptions to countries with which it has FTAs such as Mexico and Canada.

“It is no secret that certain elements of the design of the Inflation Reduction Act raised a number of concerns in terms of some of the targeted incentives for companies. This is why we have been working with the US to find solutions, for example so that EU companies and EU-made electric cars can also benefit from the IRA,” von der Leyen told leaders gathered at the World Economic Forum in January.

“Our aim should be to avoid disruptions in transatlantic trade and investment. We should work towards ensuring that our respective incentive programmes are fair and mutually reinforcing. And we should set out how we can jointly benefit from this massive investment, for example by creating economies of scale across the Atlantic or setting common standards,” she added. 

Ukraine and China

Ukraine will also feature high on the agenda, with the Commission chief and US president expected to reiterate their firm support of Kyiv as it fights against Russia’s invasion.

Brussels, Washington and their Western allies have rolled out multiple packages of sanctions against Moscow since it started its full-scale attack on its neighbour 13 months ago.

Now the focus is turning toward closing loopholes that allow Moscow to circumvent these restrictive measures, which von der Leyen and Biden should discuss. In particular, how to ensure third countries follow the sanctions and do not export Western-made products under sanctions to Russia or allow Russian products slapped with an export ban from getting out of the country.

China is also likely to be mentioned during the two leaders’ bilateral meeting as Washington has been pushing its allies to take a tougher stance on Beijing over security issues, technology competition, and unfair trade practices.

Von der Leyen’s visit will come a day after the Dutch government announced it would roll out export controls on advanced microchips manufacturing equipment. Although Amsterdam did not explicitly say it aims to limit exports to China, the move was long demanded by Washington in a bid to ensure the west and Japan, South Korea and Taiwan retain their technological edge. 

But also, the US is keen to ensure allies are ready to sanction Beijing should it provide lethal military equipment to Russia.

“Secretary Blinken has been clear that there will be consequences (if China sends lethal weapon to Russia) and he mentioned that sanctions could be one of those consequences,” US National Security Council spokesman John Kirby told reporters last week. 

“So, I mean, we’ve laid out that, you know, that there are tools available to not only the United States, but to our allies and partners should China move in that direction,” he added. 

Curbing dependencies

Finally, another topic both leaders will be keen to delve into is economic security, or how to make their economies more resilient. 

This goes hand in hand with their bids to boost their energy and technological autonomy and curb dependencies on so-called “unreliable partners”.

One of the first ideas already floated by the Commission chief is the creation of a Critical Raw Materials club that would allow them to diversify away from China which dominates supply chains for such materials. 

Although Latin American countries and Australia have more lithium reserves than China, for instance, Beijing controls about 80% of the global raw lithium production and 50% of the world’s lithium processing and refining processes, according to the Institute for Security and Development Policy.

Von der Leyen’s visit to Washington will come after a trip to Canada where she met with Prime Minister Justin Trudeau. They agreed to develop cross-Atlantic trade in green hydrogen but also boost cooperation on lithium-ion batteries. 

Canada is currently the only country in the northern hemisphere with all the raw materials needed to produce such batteries.