ifo: The EU should not compete with the US on financial support for a domestic renewable energy supply chain

Since the outbreak of the energy crisis linked to Russia’s invasion of Ukraine, accelerating the use of renewable energy, the renaissance of nuclear power and securing domestic supply chains have increasingly come to the fore. One of the most significant steps in this area was taken by the United States, which passed an anti-inflation package intended to provide hundreds of billions of dollars for energy investments. According to a new report by the German economic institute ifo, Europe should avoid competing with the United States by providing massive financial support for investment in the development of domestic supply chains.

Since global supply chains were disrupted by the COVID-19 pandemic and then the war in Ukraine, securing domestic supply chains has begun to become a priority in some countries. One of the most prominent examples is the United States, which, through its Inflation Reduction Act (IRA), aims to channel hundreds of billions of dollars into investment in the domestic energy industry, including expanding production of components for solar power plants and batteries.