ESG Stock Watch: Europe’s Auto Firms Seek US Subsidies Amid Green Economy Fight

The European Union’s Green Deal was the most ambitious environmental plan put forward by any major economy when it debuted three years ago. It called for Europe to reach net-zero carbon emissions by 2050, set interim goals for greenhouse gas reductions before the final whistle, and prompted some companies, including Glencore Plc and Norsk Hydro, both due to report earnings next week, to establish their own transitional targets before 2050. To assist in meeting the Green Deal’s vision, the plan aimed to improve access to state funds for companies, as well as empower the European Investment Bank to mobilize €1 trillion ($1.1 trillion) for climate financing.

Europe’s successes have been met in the US with the greatest flattery — imitation. President Joe Biden’s Inflation Reduction Act — which he called “the most significant investment ever to tackle the climate crisis” during Tuesday’s State of the Union address — also made billions of dollars available to companies willing to help build a greener economy. Thanks to the landmark legislation, major European brands such as Mercedes-Benz Group, also reporting next week, along with Siemens Energy AG and Volvo Car AB, have been increasingly drawn to the guaranteed returns available to them for building out manufacturing footprints in the US, thanks to the IRA subsidies. Europe, for its part, is not ready to concede its place as the premier locale for green investment, with German Chancellor Olaf Scholz backing new financing options to drive the momentum in the region.