Ron Busso and Liz Hampton
HOUSTON (Reuters) – Billions of dollars in clean energy incentives poise to accelerate investment in U.S. soil, while jeopardizing the European Union’s energy transition by luring money and talent. CERAWeek energy conference executive said this week.
U.S. President Joe Biden’s landmark Inflation Reduction Act Climate Package was signed last year, aligning Washington with allies that are moving away from fossil fuels and competing for cash and skilled workers to fight climate change. There are trade tensions between the two countries.
Europe cannot afford to see a slowdown in the energy transition as the continent suffers from soaring gas and power prices since Russia’s invasion of Ukraine.
The IRA will invest approximately $370 billion in the development of U.S. solar, wind, geothermal and other renewable energy technologies, as well as electric vehicles and projects that reduce or capture industrial greenhouse gas emissions before they reach the atmosphere. imposed tax incentives for
On Wednesday, US Energy Secretary Jennifer Granholm said the Biden administration has not apologized for the IRA and called on EU allies to follow US precedent by offering their own subsidies.
“We don’t want to cause a trade war or anything like that,” Granholm said. “We keep saying, ‘Come on, you should do the same.’ It’s all about a little friendly competition.”
“But we are serious about getting our supply chain back in the country,” she said.
She called the U.S. incentives “10 years of IRA candy you can put in the bank,” and said more than 100 companies in the electric vehicle supply chain have announced investments in the U.S. since the law was passed. said.
European energy companies have responded to calls for Europe to come up with new incentives of its own.
Jos John Imaz, CEO of Spanish energy company Repsol (OTC:) SA, said: “It’s great to see the European Union policy change from a stick to a carrot.” “Technology doesn’t have to be banned. It doesn’t need to be restricted. It has to be attractive.”
Repsol will spend nearly 40% of its project budget in the United States this year, including $1.5 billion in oil and gas, $1 billion in renewable energy, and 25% in the Iberian Peninsula. Imaz told Reuters.
“From my point of view, simplicity is one of the main characteristics of an IRA, and very important for investors…there is a wide range of possibilities to invest in many areas of the US,” he said. .
Patrick Pouyanne, CEO of French energy giant TotalEnergies, said at the conference that the IRA is “an invitation to accelerate green infrastructure.”
“Basically, we look at giving incentives as an opportunity. In Europe, we will start regulation,” he said, noting that Europe and the US should consider signing a free trade agreement on renewable energy infrastructure. added.
“We love IRAs,” said Sanjiv Ramba, CEO of hydrogen producer Linde (NYSE:) Plc. He said it was simpler and easier to understand than the EU’s lengthy policy statement.
Kojiro Ishikawa, Chief Executive Officer of Mitsubishi Heavy Industries Americas, also said the IRA will attract investment.
“All capital from developed and even developing countries is pouring into America to participate in IRA-derived investments,” Ishikawa said.
He cited the direct payment element of the law that allows foreign entities to benefit directly from the incentives.
“Uncle Sam is paying for that tax incentive…it’s shocking,” said Ishikawa, whose company is involved in hydrogen development and carbon capture and sequestration.
Ken Gilmartin, CEO of British engineering firm Wood Plc, said the IRA would put the US at the forefront of the decarbonization race.
“That’s not a sentence I thought I’d say five years ago,” he said, referring to former President Donald Trump’s withdrawal of the United States from global efforts to fight climate change.
U.S. officials expressed more modest enthusiasm for the incentives, saying permit failures could take years to develop pipelines and carbon sequestration sites.
White House energy adviser John Podesta said this week that the Biden administration is working to reduce the complexity and timelines of permits and hopes the U.S. Congress will pass comprehensive reforms to the process. Stated.
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