Biden Offers $370 Billion in Green Subsidies to Attract Clean Tech from Europe
In an effort to attract European clean energy companies to the US, states such as Michigan, Georgia, Ohio, and others have been actively promoting the deep tax breaks and subsidies available under the Inflation Reduction Act (IRA) passed in August by President Joe Biden. The IRA provides $370 billion in subsidies for clean energy and is the US's most ambitious effort to combat climate change yet. However, this move has been met with criticism from EU leaders, who accuse the US of discriminating against EU companies.
Delegations from these states have been touring Europe, promoting the benefits of the IRA to clean energy companies. “I don’t think we’ve actively recruited companies as intensely as we are now,” said Justin Kocher, director of international business for JobsOhio. European politicians have also expressed unease with the IRA, with Belgian Prime Minister Alexander De Croo complaining about the “very aggressive way” the US had pitched it to EU businesses.
Despite the backlash, US states and localities have continued to actively promote the IRA to European companies, with governors and senators visiting the World Economic Forum in Davos last week to pitch their states as clean energy investment destinations. Gunter Erfurt, CEO of Meyer Burger, a Switzerland-based solar modules manufacturer, said, “If the EU does not come up with something similar [to the IRA] then we may continue growing outside, in the US in particular, as opposed to continuing to invest in Europe.”
European Commission President Ursula von der Leyen acknowledged the competition from outside the EU, stating that the "need to be competitive with offers and incentives that are currently available outside the European Union” could lead the EU to loosen its own restrictions on subsidies.
Since the IRA’s passage, at least 20 new or expanded clean energy manufacturing plants have been announced in the US, with more than half from foreign companies. BMW announced in October that it would spend $1.7 billion on new EV and battery manufacturing capacity in South Carolina, and South Korea's Hanwha Q-Cells announced a $2.5 billion solar factory expansion in Georgia this month.
The competition between US states to attract European clean energy companies shows no signs of slowing down, with Chris Camacho, CEO at the Greater Phoenix Economic Council in Arizona, stating that "every state in the union" is now competing to draw in European business.