US, EU to Negotiate Battery Materials Deal

By Christian Roselund

U.S. President Biden and EU President von der Leyen have announced that their administrations will immediately begin negotiating an agreement to enable minerals mined or processed in the EU to count towards new requirements for the U.S. EV consumer tax credit.

The Inflation Reduction Act added requirements that vehicles eligible for $7,500 Section 30d clean vehicle tax credit contain a certain portion of local manufactured product and materials. This includes a requirement that batteries incorporate a minimum portion of critical minerals mined or processed in the United States, or a nation with which the United States has a free trade agreement, to claim a $3,750 portion of the credit.

The United States and the European Union did not have such an agreement, and this new requirement led to protests by EU, German, and French leaders, including EU Trade Minister Dombrovskis warning that the 30d credit violates WTO rules.

The joint announcement does not mention the condition that a minimum portion of battery components be manufactured or assembled in North America, which is a requirement for the second $3,750 portion of the credit. However, the United States and European Union have announced a Clean Energy Incentives Dialogue to coordinate respective incentive programs so that they are “mutually reinforcing.” This dialogue will be part of the EU-U.S. Trade and Technology Council and will including information-sharing on “non-market practices of third parties,” explicitly
mentioning China.

“We are working against zero-sum competition so that our incentives maximize clean energy deployment and jobs—and do not lead to windfalls for private interests,” reads the joint statement.

Statement: Joint Statement by President Biden and President von der Leyen (White House)