December 20, 2021
Energy Tax Credits in the Build Back Better Act Run Afoul of the World Trade Organization
In the Build Back Better framework (BBB), the Biden Administration has made reducing carbon emissions, while focusing on “Buy American” provisions, a major goal. In a new insight, Data and Policy Analyst Tom Lee explains how climate-related tax credits tied to protectionist policies could violate World Trade Organization (WTO) rules and, as a result, damage relations between the United States and its trade partners.
- To achieve the Biden Administration’s climate goals, the Build Back Better Act (BBBA) contains numerous climate-related tax credits that increase in value if the products they cover are produced in the United States.
- These types of provisions are de facto protectionist domestic content subsidies which are prohibited by existing World Trade Organization rules.
- The BBBA’s climate-related tax credits would damage relations between the United States and its strategic trade partners and would hurt American producers of clean energy.