The biggest industrial push in generations in the United States is jump-starting the country’s renewable energy markets, but also setting up a new form of international competition as countries from Europe to Asia introduce policies of their own to keep pace.
The Biden administration is aiming to “unleash US$3.5 trillion in public capital and private investment over the next decade,” the New York Times reports, aiming to offset competing subsidies from China and East Asia and rebuild the U.S. manufacturing sector after decades of offshoring. That has governments elsewhere accusing the U.S. of protectionism and developing their own incentives to keep companies from relocating.
“I think we all deny that there is a subsidy race, but up to a certain extent, it’s happening,” Markus Beyrer, director general of the BusinessEurope trade lobby, told the Times.
“The administration says the investments will put the United States in a better position to deal with climate change and make it less dependent on potentially risky supply chains running through China,” the Times writes. “But the spending has sparked concerns about taking government resources away from other priorities, and adding to the debt loads of countries when high interest rates make borrowing riskier and more expensive.”
The influx of new money “is also straining alliances by giving the companies that make prized products like batteries, hydrogen, and semiconductors the ability to ‘country shop’, or play governments against one another other as they try to find the most welcoming home for their technologies,” the news story adds. In the last year, Canada has made a series of announcements aiming to stake out a specialty in batteries, EV assembly, and critical minerals.
The Times cites Freyr Battery, a lithium ion battery develop that was building a plant in Norway when it got wind of the incentives U.S. Inflation Reduction Act (IRA). It ended up moving the operation to the U.S. state of Georgia.
“We think it is a really ingenious piece of modern industrial policy, and consequently, we’ve shifted our focus,” Freyr CEO Birger Steen told the Times. “The scaling will happen in the United States, and that’s because of the Inflation Reduction Act.”
In October, Biden administration senior advisor John Podesta said foreign governments had been doing “a certain amount of bitching” about the IRA, pointing to Europe’s new green industrial policy as one result. “So with the bitching comes a little bit more shoulder to the wheel, so that’s a good thing,” he said.
Click here to get the rest of the Times story on the new competition for green energy investment.
