Mandy Meng Fang
The US–China trade battle in the clean energy sector reached a significant legal milestone when China initiated action over the US Inflation Reduction Act (IRA) at the World Trade Organization (WTO) in March.
As the world’s two largest economies and greenhouse gas emitters, China and the United States also rank first and second in the world in clean energy investment. US–China competition in clean energy technologies and industries, which are integral to global decarbonisation, has ramped up drastically in recent years. The pursuit of industrial competitiveness across the entire clean energy value chain is no longer merely viewed through the lenses of climate change mitigation and economic growth but increasingly through the perspectives of national security and geopolitical supremacy.
China’s growing clean energy dominance in the manufacture of electric vehicles, power batteries, solar panels and critical minerals processing has provoked concern and a backlash in the West, especially in the United States. The passing of the US IRA, promoted as ‘the most significant climate legislation’ in US history, manifests this concern. With its budget of US$369 billion, mostly comprised of tax credits for clean energy and climate-related programs, the IRA conditions the eligibility for such incentives on meeting requirementsfavouring the use of domestic over imported goods to avoid using goods of Chinese origin.
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