(Bloomberg) -- The US climate law will spur a wave of clean energy development and new technology critical to constraining global warming, intensifying the pressure for Europe to keep pace, the head of the International Energy Agency said Friday.

“We are entering a new industrial age — an age of clean energy technology manufacturing,” Fatih Birol said at an event hosted by the Council on Foreign Relations in New York.

Although China is now “by far the leader” in that manufacturing race, the US wants to compete with the Inflation Reduction Act, which is unlocking as-yet-underappreciated benefits for global markets and technology development, Birol said. 

More than $300 billion of clean energy incentives in the law enacted last year are already spurring global competition, as other nations seek to bolster domestic manufacturing of electric vehicles, renewable power gear and other advanced technology critical to curtailing greenhouse gas emissions. The EU has pledged as much as €300 billion ($326 billion) to counter the IRA incentives.

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Given the high energy costs and demands of Europe’s current industrial base — and the need to compete with the US and China — the bloc needs to adopt a new approach, Birol said. 

“Europe has to come up with a master plan for a new industrial strategy,” Birol said, adding that he has pressed the issue with European leaders.

Birol separately admonished clean energy champions who oppose carbon capture and nuclear power, arguing those and other technologies will be critical to keeping the earth’s temperature rise in check. Critics who don’t see them “as part of the solution are really underestimating the order of magnitude of the challenge we have,” Birol said, adding that there is still “a need for innovation.”

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