LONDON — U.K. Energy Secretary Claire Coutinho has signaled a Cabinet split over Bidenomics, after praising the impact of a massive U.S. green subsidy scheme.
Biden’s Inflation Reduction Act, which has poured hundreds of billions of dollars into subsidies and tax breaks for U.S. clean energy firms, has been widely criticized by senior U.K. government figures including Chancellor Jeremy Hunt and Business and Trade Secretary Kemi Badenoch, who branded it “protectionist.”
But Coutinho, a close ally of Prime Minister Rishi Sunak, told an event on Wednesday night that moves in the U.S. and EU to increase green subsidies are a “welcome thing,” with the potential to drive down prices in the U.K. and elsewhere.
Badenoch slammed the IRA in February, arguing it was likely to “create problems with the supply chain for everybody else.” “I don’t think it is a good idea,” she said.
The minister stands by her comments, an aide said.
“One of the things that we have seen over the past year is the EU and the U.S. increase the level of subsidies” for clean tech, Coutinho told the Policy Exchange think tank, adding: “In some ways, I actually think this is quite a welcome thing for us because it means you have more countries spending more money, driving down green premiums, creating new technologies that we can all use.”
Her comments come one week after the U.K. stumped up its own response to the IRA, pledging £4.5 billion in subsidies for British manufacturing, with over £2 billion earmarked for climate-friendly electric vehicles and £960 million for funding other sectors key to net zero.
Chancellor Jeremy Hunt — who previously warned that the U.K, would not go “toe-to-toe” with Biden’s multi-billion-dollar subsidy plan in “some distortive global subsidy race” — said the funds would create new jobs and grow the economy.
Coutinho said Wednesday that the U.K. had a “moral duty” to create and export green technology in order to tackle climate change. “More players” innovating on clean energy tech was “genuinely a welcome thing” in driving down costs, she said.
Additional reporting from Stefan Boscia