ANNOUNCEMENT: Expert Investor is now PA Europe. Read more.

Inflation Reduction Act could entice green projects away from Europe

US has ‘changed the game’ and ‘created an industry out of nowhere’

The inflation Reduction Act just signed into force by US president Joe Biden (pictured) may cause Europe to fail to meet its green targets, says the head of global green energy company Fortescue Future Industries.

Speaking to the Financial Times, Mark Hutchinson, the former head of GE Europe who is now running Fortescue, said that large-scale hydrogen projects on the continent could see the funds used to power them move to the US to take advantage of the tax credits offered under Biden’s new legislation.

According to the White House’s own website, “For the first time ever, the Inflation Reduction Act establishes Make it in America provisions for the use of American-made equipment for clean energy production. The law provides expanded clean energy tax credits for wind, solar, nuclear, clean hydrogen, clean fuels, and carbon capture, including bonus credits for businesses that pay workers a prevailing wage and use registered apprenticeship programmes.”

Further on, the briefing says the Act will look to, “build American clean energy supply chains, by incentivising [sic] domestic production in clean energy technologies like solar, wind, carbon capture, and clean hydrogen”.

It will also target tax incentives towards US-sourced products such as batteries, solar, and offshore wind components, as well as carbon capture systems.

This, says Hutchinson, is likely to draw money away from Europe and into the US. “The US has changed the game,” he told the FT. “They have created an industry out of nowhere.”

Hutchinson went on to say that Brussels needs to batten down the hatches, put its shoulder to the wheel, and come up with a response to the US legislation.

The continent is not entirely bereft of hydrogen projects, however. Earlier this month, the EIB and Hydrogen Europe announced they had an advisory services agreement to look for and examine projects that the bank could provide with financing.

So there’s that…

MORE ARTICLES ON

MORE IN

  • Can M&A and buybacks breathe life into UK market?

    Can M&A and buybacks breathe life into UK market?

    Both buybacks and M&A should help realise value in UK shares, boosting prices and giving investors another reason to consider the UK stockmarket Not only does M&A activity appear to be picking up, with a high-profile bid for UK electronics retailer Currys, but the scale of company buybacks continues to accelerate. If it goes well,…

  • Capital Group launches multi-thematic Article 8 funds

    Capital Group launches multi-thematic Article 8 funds

    Capital Group has launched a set of multi-thematic sustainable funds that are available for investors in Europe, writes Christian Mayes. The Capital Group Sustainable Global Opportunities fund (LUX) will invest in global equities, while the Capital Group Sustainable Global Corporate Bond fund (LUX) will target fixed income exposure. The launch also includes a multi-asset offering…

  • Bond funds pull in €29.7bn in January – LSEG

    Bond funds pull in €29.7bn in January – LSEG

    Bond products were the best-selling asset class in January, according to LSEG Lipper’s European Fund Flow report, writes Christian Mayes. The asset class pulled in a net €29.7bn in the month, while Money Market USD grouping was the best-selling Lipper Classification after receiving €11.2bn inflows. Providers of mutual funds pulled in €22.5bn, while passives saw net…

  • Quarter of Article 8 funds at risk of greenwashing – MainStreet Partners

    Quarter of Article 8 funds at risk of greenwashing – MainStreet Partners

    A quarter of all Article 8 funds could be accused of greenwashing based on their sustainability framework and practices, according to MainStreet Partners, writes Christian Mayes The 24% of funds classified as a greenwashing risk by the 2024 ESG Barometer report marks a four percentage point increase from the 20% flagged at the end of…

  • EU green rules could stymie decarbonisation projects – ExxonMobil

    EU green rules could stymie decarbonisation projects – ExxonMobil

    The European Union’s climate regulations may lead to it halting its investments in Europe, ExxonMobil has warned. Speaking to the Financial Times, Karen McKee, president of the product solutions division, said the oil and gas giant had struggled to begin decarbonisation projects in Europe due to the regulatory burden. The result, she added, was that…

  • ICE flags need for Europe to double green investment

    ICE flags need for Europe to double green investment

    Investments to modernise energy and transport must double by the end of the decade to reach 2030 climate targets, the EU has been warned. According to the Institute for Climate Economics (ICE), which has released the European Climate Investment Deficit report, the bloc lacks what it calls a “consistent tool” to ensure monitoring of the…