US TAX BREAKS LURE EUROPEAN CLEAN TECH COMPANIES AS EU LAGS

Norwegian startup Freyr will first build batteries to power electric vehicles and store clean energy in a remote town near the Arctic Circle. Up next? An Atlanta suburb.

That’s because a new U.S. clean energy law offers generous tax credits — up to 40% of costs — in what is a “massive, massive incentive” for producing in America, CEO Tom Einar Jensen said.

Across Europe, companies seeking to invest in the green energy boom — churning out everything from solar panels to windmills and EV batteries — are making similar calculations, weighing up the U.S. Inflation Reduction Act’s $375 billion in benefits for renewable industries against a fragmented response that European leaders have been scrambling to patch together for months.

The law aims to kick-start the U.S. transition away from climate-changing fossil fuels with tax credits and rebates that favor clean technology made in North America.

It blindsided Europe when it became law in August, putting the U.S. on course to eclipse the continent in the global push to reduce carbon emissions and leaving European leaders fuming over rules that favor American products, threatening to suck green investment from Europe and spark a subsidy race.

The European Union’s executive branch responded with plans aimed at ensuring least 40% of clean technology is produced in Europe by 2030 and limiting the amount of strategic raw materials from any single third country — typically China — to 65%. It also opened negotiations with President Joe Biden on making Europe-sourced minerals for EV battery manufacturing eligible for U.S. tax credits.