EU Trade Committee Leader Proposes Hydrogen Tax on US Imports in Response to Inflation Reduction Act

By July 5, 2023 2   min read  (357 words)

July 5, 2023 |

EU Commission 2

The European Union is considering implementing a hydrogen tax on US imports, a proposal put forward by Bernd Lange, the chair of the European Parliament’s trade committee. The suggestion is in response to the contentious US Inflation Reduction Act (IRA) that offers a €370 billion package of subsidies and tax credits aimed at fostering green technology advancements, such as hydrogen, wind turbines, and electric vehicles.

The IRA’s “Buy American” clauses, which favor domestic production, have drawn sharp criticism from EU policymakers. Lange is pushing for a more robust EU trade policy in the wake of the IRA’s provisions offering tax credits for hydrogen production—an essential energy carrier and a vital component for low-carbon steel manufacturing. US regional production sites often enjoy further subsidies.

Speaking at a conference organized by the German trade union IG BCE, Lange pointed out the triple subsidies system: “If you produce hydrogen in Texas now, then first you get the infrastructure subsidized. If you install additional wind energy, another subsidy, and production is subsidized for ten years, which we don’t do at all in Europe.”

Aiming to achieve a hydrogen price of $2 per kilogram through these subsidies, the US significantly undercuts Europe’s current rate of €9 per kilogram. In response, Lange stated, “Therefore, we will tell our American friends that we will not accept these illegal subsidies – which are also illegal within the WTO framework – and we will initiate anti-dumping measures accordingly.”

Anti-dumping measures involve imposing tariffs on imported goods sold below “normal value”. They can be enacted by the EU under international trade rules. Lange proposed that such tariffs might be necessary on US hydrogen imports, mirroring the EU’s approach to products and services from China’s state-owned enterprises.

Concluding his statement, Lange stressed the need for the EU to adopt a more assertive stance, noting that the EU had been too transparent about its market situation in the past. At present, the EU has imposed five anti-dumping measures on US products, compared to 96 tariffs on Chinese products, according to the 2022 annual report.

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