Germany is calling for a joint European response to the U.S. Inflation Reduction Act, which would include simplifying government support rules and expanding financing options, according to a German economy ministry document seen by Reuters.

The European Union could develop a program to promote green technologies by combining different elements of funding to avoid budget constraints: for example, the Innovation Fund could increase support for large-scale clean-tech projects, or the European Investment Bank (EIB) could take on more risk through guarantees, the paper said.

The ministry document also suggests that member states could more tightly enforce sustainability criteria in public tenders at the national level, and expand or increase traditional subsidy programs, but it cautions against local content requirements that favor domestic industry. According to the document, this would not only be contrary to World Trade Organization (WTO) law, but would also contribute to further erosion of the world trade order.

While European Union countries welcome Washington's drive to invest in clean technologies, they argue that 200 billion euros (U.S. subsidies tied to local content could violate WTO rules by disadvantaging their companies.

The EU and Washington have set up a joint working group in hopes of resolving the dispute over the $430 billion law.