It has become a symbol in Europe of the billions in green money the US is throwing away: the $7,500 tax credit Americans get when they buy an electric car. Pain is good: The car must be assembled in North America. An American who buys an electric car from Europe gets nothing. Buy American.
As a result of the US deflationary act, the waiver comprises the bulk of a package of USD 369 billion (€347 billion) in green subsidies and tax credits to stimulate sustainability. Despite the name, the law has little to do with inflation, but an interpretation of extreme US climate policy, something Europe has been waiting years for. European Commission President Ursula van der Leyen Tweeted When the law was passed in August, there was immediate excitement about it.
Meanwhile, American climate billions make European politicians, but Industry leadersMostly concern. Because its own industry already had a weak competitive position due to very high gas prices in Europe. Some Europeans take a bit more serious offense: protectionism!
Van der Leyen’s vote on US climate legislation has changed
Meanwhile van der Leyen’s mood has also changed. This month She wrote in a letter Many companies are now considering ‘moving operations outside the EU’ and he wants to act. Member States Feel that too. But what industry does Europe care about? Are any companies doing what van der Leyen fears?
Powerful car lobby
Return $7,500 to American car buyers: This is not the best example of how climate money threatens European industry. “Europe exports few electric cars to the US,” says Julia Poliskanova of the European Ecosystem Transport and Environment. According to Poliscanova, tax incentives for companies that manufacture batteries are “one A game changer”. Such companies can quickly earn a lot of money in the United States.
Still, it’s no surprise that the electric car comes back so often when it comes to American threats. The deflationary law is so broad that it is difficult to pinpoint an industry most vulnerable to it. A $7,500 tax credit for car buyers sounds good and solid — and the auto industry is known for its strong lobbying power.
However, most of the EUR 369 billion is earmarked for companies through tax credits, grants and loans. $43 billion is allocated to consumers. Besides a plug-in car, they can get a discount on a heat pump or solar panels.
According to the companies, Europe hangs many rules on green subsidies
Billions for business are again categorized. The giant pots are intended for generating and storing green electricity such as solar and wind, for companies developing green energy technology, and for producing green hydrogen. But sectors other than energy are also benefiting. For example, USD 6 billion is available for making high-polluting industries such as steel, cement and chemicals more sustainable, USD 6 billion for agricultural companies and USD 3 billion for electric car makers. Companies that emit CO will also be rewarded2 Capture and save: Up to 85 dollars per ton.
This is precisely what makes European politicians and institutions nervous. “This Everywhere”, says Ingrid Thijsen, president of the employers’ lobby club VNO-NCW. “We’re called flat about it.” She finds it difficult to name which sectors are most vulnerable. However, he specifically mentions ‘energy-intensive companies’ due to high gas prices, for example in the chemical sector or in the manufacturing sector. The Inflation Act is included in it.
But surely not every Dutch factory suffers from this? “No. But let’s say you’re a Dutch paper manufacturer, and it’s been expensive to make paper here for a long time, and you can imagine that you’ll still look at the U.S. because there’s going to be green energy very soon. Or if you’re a CO, you’re going to get a lot of subsidies there.2 saves.”
Tesla in Germany
On the other hand: you don’t take a factory and put it down on the other side of the ocean. There are still few concrete examples of companies actually moving their production, as van der Leyen fears. When planning an expansion it makes a lot of sense to think deeply about where you are doing it. And frankly suspect – to increase pressure on the EU.
Swedish Northvolt, a European soil battery manufacturer, does exactly that. Nordvold has a factory in northern Sweden and will build a second in Germany, but may now want to do so in the US. Statistically, it doesn’t seem like a hard choice: In the United States, according to Northwoldt 600 to 800 million dollars in subsidiesCompared to 155 million euros in Germany. Yet Europe seems to have one more chance: the decision is still undecided Financial Times exclaimed Northvolt’s chief executive Europe up Bring “one of a kind” to the US package.
Other companies are also talking. CEO of Spanish energy company Iberdrola says the FT The US is now a “more” attractive place to invest in green energy than Europe. Of the investments Iberdrola wants to make in the coming years, most of the money will go to the US – but the money is stuck in Europe.
Worries are further fueled by companies taking concrete steps without pointing fingers at US billions. German chemical giant BASF thinks it’s becoming too expensive in Europe It will permanently reduce production at its European locations. Industrial group Bosch from Germany will invest half a billion in the manufacture of batteries in the United States, among others. And Swiss Mayer, a maker of components for solar panels, plans to build a factory in Arizona.
And then there’s the question of what Tesla will do. The Wall Street Journal announced this fall Elon Musk’s company has put plans to make batteries in Germany on hold due to new US legislation. According to German Handelsblatt There is a gap However do with resource scarcity. Tesla has yet to announce anything.
Although it is difficult to get a good overview, it is not as if Europe has nothing to offer companies with sustainable projects. But access to European money remains limited, says Philippe Losberg, an analyst at the Center for European Policy, a Brussels think tank. “There are various initiatives: the Corona Recovery Fund, the REPowerEU project, the Innovation Fund, the InvestEU project. And that makes it complicated.” And then member states have their own pots, like Invest-NL in the Netherlands. In addition, companies have to comply with many regulations, says Lausberg, which costs time and money. “The industry complains about that.” According to Lausberg, the anti-inflation law runs for ten years. , distinguished precisely by its simplicity and accessibility.
On LinkedIn Thomas Schaffer, a member of the Volkswagen Group, echoes this sentiment. He finds European state aid rules ‘old-fashioned’ and ‘bureaucratic’, in contrast to ‘attractive’ opportunities in the US.
America is urging Europe to see this. It deviates from the chosen path: “Europe has actually been focusing more on greening with CO for years.2pricing,” says Rem Korteweg of the Kleingendale think tank. Europe’s biggest polluters must pay for their CO2emissions. This month, the European Parliament and member states Another agreement was reached Accelerate in this area, with a CO2Border tax. Kordeweg: “In America there is a lot of emphasis on subsidies and regulation. In CO in Europe2– Pricing. These are conflicting views on how to achieve the energy transition.”
Also read this story: Europe is grappling with its own response to the wave of US subsidies
But the EU does not want to be left behind when it comes to government support. Van der Leyen has already come up with this month An offer: Member States’ state aid rules should be ‘simpler, faster and more predictable’, and more European money should be available. Member States have yet to agree to this. In addition, the EU is trying to bring the Americans into a special task force to adapt the rules to Europe A modest success Recorded.
The European Commission ‘started fast’, says Korteweg van Klinkendael. ‘By making it clear that there is more to come, the Commission is trying to buy time. Otherwise, companies will start projects immediately. Now everyone is still speculating for now” – Will Brussels come up with more money?
A version of this article appeared in the December 31, 2022 issue of the newspaper
“Award-winning beer geek. Extreme coffeeaholic. Introvert. Avid travel specialist. Hipster-friendly communicator.”