US, EU officials fail to reach critical minerals agreement at summit

An Oct. 20 summit between US and European officials failed to yield an anticipated deal that would allow electric vehicles with critical minerals refined or processed in the EU to qualify for Inflation Reduction Act tax credits.

Under the law, a set percentage of the critical minerals used in an EV battery must be extracted or processed in the US, or in a country with which the US has a free trade agreement, in order for the vehicle to qualify for tax credits.

No EU member countries have free trade agreements with the US, according to the United States Trade Representative, making EVs ineligible for the credits if a majority of the battery materials were extracted or processed in the bloc. EU member states have previously said such provisions unfairly distort clean energy technology markets.

A US-EU critical minerals deal, which could mirror a US-Japan trade pact signed in March, would expand the list of countries automakers could source materials from for tax credit-eligible vehicles.

"We have made progress toward a targeted critical minerals agreement for the purpose of expanding access to sustainable, secure, and diversified high-standard critical mineral and battery supply chains and enabling those minerals extracted or processed in the European Union to count toward requirements for clean vehicles in the Section 30D clean vehicle tax credit of the Inflation Reduction Act," the US and EU governments said in an Oct. 20 joint statement following the US-EU Summit. "We look forward to continuing to make progress and consulting with our respective stakeholders on these negotiations in the coming weeks."

Although officials did not reach a deal at the summit, negotiators are still in talks that could result in an agreement within the coming weeks or months, Reuters quoted French Trade Minister Olivier Becht as saying Oct. 20.

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