“Green” Deal of Biden Administration: Ambitions and Realities

Dmitriev Sergey

doi:10.20542/0131-2227-2024-68-10-38-47

“Green” Deal of Biden Administration: Ambitions and Realities

S. Dmitriev

Rubric: Economy, Economic Theory

DOI: 10.20542/0131-2227-2024-68-10-38-47

EDN: DXXGHC

S. Dmitriev, ssd@imemo.ru

Primakov National Research Institute of World Economy and International Relations, Russian Academy of Sciences (IMEMO), 23, Profsoyuznaya Str., Moscow, 117997, Russian Federation.

Received 20.05.2024. Revised 19.06.2024. Accepted 01.07.2024.

Abstract. The ambitious “green” industrial policy program promoted by the Biden administration is designed to consolidate the US claims to its leading role in shaping the global climate change agenda. The package of legislative acts approved by the White House provides for unprecedented allocations to address priorities for decarbonizing the American economy. Pumping up targeted manufacturing industries with federal subsidies and tax incentives has generally had a positive impact on economic growth, employment, labor productivity and innovation activity. After the adoption of the Inflation Reduction Act of 2022 (IRA), the process of transforming alternative energy into the fastest growing and relatively affordable source of electricity attractive for private investment accelerated. Large-scale investments of public and private funds in renewable energy sources, electric transport and batteries have stimulated the use of national resources. At the same time, the task set by the White House to achieve sole global leadership and weaken the dependence of national industry on supplies of raw materials, components and finished products from “unfriendly” countries still looks elusive. The most significant obstacle to meeting Washington’s overstated ambitions in terms of increasing the chances of American companies competing with China is the continuing lag in building up the production base of “green” energy. The US dependence on supplies of the “green triad” – solar panels, lithium-ion batteries and electric vehicles remains high. Washington’s aggressive protectionist actions have failed to prevent Chinese companies from developing alternative energy sources, as well as the new energy vehicle industry (NEVs). The confrontation with China distracts the material resources of the United States from the tasks related to the implementation of the “new green deal”, creates obstacles to the scaling of “green” technologies. If the Biden administration or his successor as US president act even more aggressively, it will make it more difficult to achieve Washington’s climate goals, may involve some US allies in a “subsidy war” and may even serve as a trigger for a new escalation of international tensions.

Keywords: USA, China, economic nationalism, industrial policy, supply chains, import substitution, protectionism, trade policy

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For citation:

Dmitriev S. “Green” Deal of Biden Administration: Ambitions and Realities. World Eсonomy and International Relations, 2024, vol. 68, no. 10, pp. 38-47. https://doi.org/10.20542/0131-2227-2024-68-10-38-47 EDN: DXXGHC

Contents World Eсonomy and International Relations. 2024, vol. 68, no. 10

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