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Foreign businesses are some of the biggest winners in the Inflation Reduction Act in the United States as the incentives have spurred a lot of investment in clean energy technologies from overseas firms, an analysis by The Wall Street Journal has found.
The U.S. Inflation Reduction Act (IRA) has nearly $370 billion in climate and clean energy provisions, including investment and production credits for solar, wind, battery manufacturing and battery storage, critical minerals, funding for energy research, and credits for clean energy technology manufacturing such as wind turbines and solar panels. Since the tax credits in the IRA are more often than not linked with output volumes, the largest investors in production at scale – including businesses based overseas – are the biggest winners.
In nearly one year since it was passed, the IRA has incentivized announcements of close to $110 billion worth of clean energy projects in the U.S. Companies based outside the United States are involved in over 60% of these projects, according to the Journal’s analysis. Many of the foreign companies involved in U.S. clean energy projects are based in South Korea, Japan, and China, according to the WSJ estimates.
Since the IRA was passed, several U.S. states have been looking to attract European clean energy and clean technology companies to invest in American production and operations as they will benefit from the clean energy provisions in the Inflation Reduction Act.
Some Europe-based companies have already announced plans to expand in U.S. operations, attracted by the provisions in the IRA.
BMW has announced a $1.7 billion investment in its United States operations, including $1 billion to prepare for the production of electric vehicles at Plant Spartanburg, and $700 million to build a new high-voltage battery assembly facility in nearby Woodruff, S.C.
FREYR Battery of Norway announced in November plans to build a U.S. Gigafactory in Georgia.
By Tsvetana Paraskova for Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.