Impact of the Inflation Reduction Act on EU competitiveness

In August 2022, the US Congress passed the USD 369 billion Inflation Reduction Act (the Act) with the aim to increase the speed of decarbonisation in the US among other things. Over the coming decade, the Act offers billions in tax breaks and subsidies for companies producing renewable energy and green hydrogen, and for consumers purchasing electric vehicles in the US.

The EU has criticised the Act for containing distortionary elements such as requirements for local US or North American contents and production. The concern is that production, investments, and scarce natural resources will flow to the US, and the EU will lose competitiveness in strategic sectors.

Therefore, the Confederation of Swedish Enterprise asked Copenhagen Economics to examine the possible impact of the Act on EU competitiveness.

The main conclusions of our study are

Find the Confederation of Swedish Enterprise’s report, including our analysis here.