Dozens of companies have announced recent clean-energy investments, with many coming from overseas businesses.
- Countries in Europe and the U.S. have started announcing investments in clean-energy alternatives like electric vehicle (EV) batteries and chargers.
- Battery makers Freyr and Northvolt–from Norway and Sweden, respectively—have announced billion-dollar investments in the U.S. as both plan new facilities, Fortune reports.
- German automaker Volkswagen has planned at least a $7.1-billion investment in North America as it prepares its 25 new EV models, and Italian manufacturer Enel is planning to add 10,000 fast EV chargers in the U.S.
- Other companies are looking to create fuel alternatives. HIS Global and Tree Energy Solutions, both European companies, are planning billion-dollar investments in Texas.
Why it’s news
European investors are coming to the U.S., drawn by the incentives offered in the Inflation Reduction Act and similar legislation. The law provides relatively easy access to benefits for companies that meet the criteria, increasing manufacturers’ interest in taking advantage of the incentives.
“It’s a very clear mathematical tax credit,” Los Angeles clean-tech investor Alex Mitchell tells Fortune. “For every X batteries you produce, with Y of them sourced in the U.S. or its trade allies, you get Z in tax dollar credit. It’s fairly easy to look at the bill, and do a corporate P&L.”
The simplicity of the legislation is a big draw for many companies looking for a simple way to take advantage of benefits. What makes the recent influx of investment interesting, however, is where it comes from—European and Asian companies.
This is at least in part because European and Asian businesses are already on board with two necessary aspects of clean tech investing: they have a long-term investment mindset, and they are comfortable with public-private cooperation, Fortune reports.
While European companies have long worked in partnership with their respective governments, American companies have often struggled to strike this same balance.
Though the legislation has its supporters among businesses looking for benefits, the Inflation Reduction Act has its share of critics in the U.S. who argue that the free market is set up so that businesses can fund the proper investments to drive these initiatives. The bill costs too much to be of any benefit to the American economy.
“It’s going to be increasing inflation in the short term. The government doesn’t have money to fund it, so the $427 billion is going to mean more debt, which in turn will cause inflation, which longer term will not reduce inflation significantly,” Fluent Financial CEO Mitch Kramer tells Leaders Media.