US tax breaks lure European clean tech companies as EU lags

LONDON — Norwegian startup Freyr will first build batteries to power electric vehicles and store clean energy in a remote town near the Arctic Circle. That’s because a new U.S. clean energy law offers generous tax credits — up to 40% of costs — in what is a “massive, massive incentive” for producing in America, CEO Tom Einar Jensen said. Across Europe, companies seeking to invest in the green energy boom — churning out everything from solar panels to windmills and EV batteries — are making similar calculations, weighing up the U.S. Inflation Reduction Act’s $375 billion in benefits for renewable industries against a fragmented response that European leaders have been scrambling to patch together for months. “The conditions of the IRA are so attractive that Europe risks to lose the race for billions of investments that will be decided in the coming months and years.” Volkswagen said last month that its new PowerCo battery business would build its first gigafactory for EV battery cells outside Europe in St. Thomas, Ontario — following two others under construction in Germany and Spain. The IRA has stoked so much demand for standalone energy storage systems like the ones that Freyr makes — big banks of batteries that utility companies use to store renewably generated electricity — that the company moved the U.S. completion date up by a year to 2025, Jensen said.