Many of the subsidies in the IRA have requirements for the manufacturing or sourcing of components from the US or North America (the integration of the manufacturing sector, particularly in automotive, makes it infeasible to disentangle Canada and Mexico from sourcing requirements). This represents an attempt to frame the IRA as a jobs programme, in order to achieve domestic buy-in. These provisions have prompted both criticism and imitation from the US’s Western allies. The EU, Japan, Australia and other Western allies have expressed concern that the pool of money available will shift fast-growing and innovative clean-energy industries to North America.

In response, a spate of countries have developed legislation similar to the IRA. Most prominently, the EU has relaxed its own state aid rules through the Green Deal Industrial Plan—a series of proposals that includes the Net-Zero Industry Act (NZIA)—and the Temporary Crisis and Transition Framework, which allows member states to use state aid to match foreign state aid if they can credibly show that business might otherwise move elsewhere. France has already taken advantage of these relaxations to subsidise 25-40% of investment in green capital, a subsidy package estimated to create €20bn in investment. These subsidies are conditional on sourcing various components from the EU.