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    Europe’s Sulking

    Rumour has it that cowboys from the Wild West are roaming the European green fields these days, stealthily poaching our most eligible native clean tech heroes and luring them to greener pastures across the Atlantic. Perhaps it is more than rumours. Reputable news outlets, too, inform us of delegations from Michigan, Georgia, Ohio, and where-not touring the old continent. And they come bearing generous gifts, from tax breaks to lucrative loans and subsidies, all courtesy of the IRA.

    I am, of course, referring to the Inflation Reduction Act, not the infamous paramilitary organisation. It would appear, however, that for the politicians in Brussels, their American brethren are about as welcome here as those ruthless old-time Irish terrorists. They call the Yankees’ campaign to divert local green businesses westward too aggressive or even a blatant violation of World Trade Organization’s rules. The shivers down the spines of many European leaders are palpable as they fret over the vision of future investments and jobs disappearing alongside their own popularity.

    Ironically, it was not that long ago that we were all urging the USA to get serious about pitching in to solve the global environmental challenges. The message was clear: step up your sustainability game and abandon your wasteful ways, Big Brother, unless you want to lose your title as the leader of the free world. So, upon passing the IRA, (almost) everyone celebrated president Biden’s unexpected success as a victory for the whole planet. And we proceeded to cheer the results it has been delivering since. According to the American Clean Power Association’s latest report, over USD 40 billion of new grid-scale clean energy investments have been announced in just the last three months, more than half of those from foreign companies.

    Ay, there’s the rub! The reason we are sulking, that is. Never mind the planet and our common goals and imperatives. We want those investments in the green solutions of the future for ourselves. We need companies to build battery factories and electric vehicle assembly plants here, in the heart of Europe. We are experiencing an unprecedented reversal of the old ‘not-in-my-backyard’ mindset.

    And so, calls to match the attractive American package are all the rage, as witnessed at Davos’ trend-sensitive slopes. “Protectionism hinders competition and innovation and is detrimental to climate change mitigation,” claims German chancellor Olaf Scholz. Well, American protectionism, obviously. Not Ms. von der Leyen’s masterplan for a Net-Zero Industry Act, cleverly designed to keep European industry attractive. Despite admitting that “a tit-for-tat reaction risks significant economic self-harm,” the venerable executive vice-presidents of the European Commission Valdis Dombrovskis, Frans Timmermans and Margrethe Vestager still choose to focus on the “discriminatory aspects” of the IRA. And protect ourselves we shall.

    As if protectionism ever worked.

    Julia Axelsson, CAIA
    Julia Axelsson, CAIA
    Julia has accumulated experience in asset management for more than 20 years in Stockholm and Beijing, in portfolio management, asset allocation, fund selection and risk management. In December 2020, she completed a program in Sustainability Studies at the University of Linköping. Julia speaks Mandarin, Bulgarian, Hindi, Russian, Swedish, Urdu and English. She holds a Master in Indology from Sofia University and has completed studies in Economics at both Stockholm University and Stockholm School of Economics.

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