One of the European Union's strongest critics of a massive US climate law is warning that Washington's subsidies and China's policies are drawing billions of dollars of clean-tech investments away from the bloc.
The EU's internal market authority said that the American law will build a "new industrial ecosystem" and poses a danger to Europe's competitiveness,” and identifies more than $25bn of company spending heading to the US and China in its initial assessment of the law seen by Bloomberg.
The EU is still working through how to respond to US President Joe Biden's huge climate law, which will offer as much as $369bn (€350bn) in handouts and tax credits over the next decade for clean energy programs in North America. The assessment mentions companies such as Tesla and Volkswagen, which are prioritising investment in the US.
"Europe's competitiveness and resilience is in danger," according to the document. It also warns that the subsidies the US distributes to the industry "dangerously distort competition" and investment decisions.
The possible divestments from the EU to North America and China are mostly based on publicly available information, as well as bilateral discussions with the industry.
It acknowledges that though many of the announcements have been made since the adoption of the Inflation Reduction Act (IRA), not all of them are necessarily a direct consequence of the legislation or will come to fruition. In some cases, it's not clear that increased investments will lead to lower engagement in the EU, the document also says.
The EU's tough stance has ebbed in recent weeks, with other officials suggesting that the EU's own incentives are equal or greater than some of the benefits offered in the US law.
"The IRA is an opportunity to green the US economy, but we have some advantages vis-a-vis the US that we need to emphasise," Frans Timmermans, the EU's green deal chief, told reporters last month. The EU provides an amount that "is at least comparable to the amount of money that the Americans are putting on the table", he said.
The assessment was drafted early last month by a team run by the EU's internal market commissioner, Thierry Breton, an outspoken critic of the law.
The document cites the findings of a survey of top European industry executives that showed that in the second half of last year the level of confidence is at record lows and below what was observed at the beginning of the Covid pandemic.