EU's von der Leyen says she will tackle US green subsidies, overcome e-fuels impasse

FRANKFURT, Germany (Reuters) - EU Commission President Ursula von der Leyen said on Sunday she is determined to counter challenges from U.S. subsidies for green technologies and to speed a currently blocked law on phasing out combustion engines from 2035.

Visiting Chancellor Olaf Scholz and the German cabinet at the start of a two-day meeting near Berlin, von der Leyen said the U.S. Inflation Reduction Act (IRA) would bring huge tax breaks for clean technologies made in the United States.

"We have discussed our answers: negotiations with the U.S. about interpreting the law, investments of our own, and speedier processes," she told reporters at Meseberg near Berlin.

European electric carmakers had been given access to U.S. tax advantages but the EU needed to ensure they also benefited in the batteries and battery component segments, where more talks were needed with Washington, she said.

European legislative action within a fortnight would propose to unleash European aid and funds so far not used for the green transition at home, she said.

A Commission report on competitiveness, due at the same time, would help lower barriers inside the internal EU market and address shortages of specialised labour, which von der Leyen called a "brake on growth."

Separately, fresh from agreeing trade deals with New Zealand and Chile, the EU is seeking deals with Australia, Mexico and the Latin American Mercosur bloc by the end of 2023, she said.

Scholz and von der Leyen said that trade agreements were also being eyed with Indonesia and India.

Commenting on the delay to ending sales of new CO2-emitting cars in the EU in 2035 after Germany questioned its support for the policy, she said the issues could be resolved.

"It has to be in balance with our climate goals on which there is agreement," she said. "The discussion is constructive."

Von der Leyen also said the EU was keeping a close watch on whether China sticks to commitments not to help arm Russia in the Ukraine war. "We are monitoring this every day," she said.

(Reporting by Andreas Rinke and Vera Eckert, editing by Ros Russell)