When the US are celebrating the first anniversary of the Inflation Reduction Act and achieving more than 170,000 new green jobs, Europe is still subsidizing electric cars produced outside EU with further financial support.
One year was enough to create more than 170,000 green jobs in the US. Biden’s plan has succeeded, companies are increasingly willing to locate their investments in the United States. The European Union, Norway and the United Kingdom are still trying to find a way not to fall away from the peloton led by China, and the US has ambitions to be right behind them.
In just one year, more than 270 green projects have been launched in 44 states. The total investment is close to $300 billion. The new production facilities will provide components for traction batteries, transmission infrastructure components, and charging stations. Factories for electric cars and components for new mobility are being upgraded or expanded. On 16 August 2022, President Joe Biden announced the Inflation Reduction Act – a truly green revolution has begun in the US.
Electric Drive Transportation Association (EDTA) President Genevieve Cullen highlights “With the Inflation Reduction Act (IRA), the Biden administration and the US Congress have set out a bold vision to accelerate electric-powered transportation. One year since the historic legislation was signed into law, the EDTA Association is excited about its impact on the country’s transition to electromobility and the promise of cleaner air, more livable communities and economic growth.”
Cullen stresses that this unprecedented move by the Biden administration and the mobilization of massive federal resources has galvanized the country into real action. At the regular EVS36 international conference held in Sacramento in June, she said that, in fact, electromobility alone accounted for nearly 60,000 new jobs. However, the country has a lot of catching up to do in terms of building charging infrastructure and popularizing e-cars. Apart from Tesla, no one has so far created a friendly and accessible charging network for electrics. “A whole ecosystem needs to be built,” Cullen admits.
The remaining 100,000-plus new jobs are in the broader renewable energy sector (RES), i.e. electricians, service technicians, construction workers. IT specialists, programmers, support staff are needed – one could go on for a long time. The problem is that America, like Poland and Norway, has for many years lost sight of the schools providing the profession. Building an ecosystem, therefore, will also require investment in education and giving opportunities for re-training. Without this, the crisis and pathologies in the labor market will get worse.
The percentage of unemployed in the US has been steadily falling since the end of the pandemic. Today, it accounts for about 3.5% of those able to work. As many industries are short of manpower, they have begun courting young people and children to help plug the gap already created. The timber industry, abattoirs and the construction industry are lobbying for this. The automotive industry is not heavily involved in this topic, but has a long list of sins against the youngest on its conscience. The subject of illegal employment of migrant children has been repeatedly publicized in recent years. The youngest have worked in factories producing components for the automotive industry. The number of minors employed in violation of child labour laws increased by 37% last year, and in the past two years at least 10 states have introduced or passed laws abolishing child labor protections.
There is also the other pole of this ‘Made in America’ green revolution. Industry organizations and the Department of Energy highlight that unionization rates are on the rise. The IRA includes strong labor laws and incentives to ensure that these new clean energy jobs will advance careers and build a stable economic future for individuals.
Chelsea Sexton, Senior Advisor to the U.S. Department of Energy Loan Programs Office, asserts that proper document analysis, due diligence and project oversight will eliminate disadvantages – including precisely those related to underage employment.
Sexton also notes that investments prepared in this way provide a guarantee that money from public support will not go to companies linked to countries with which the US does not want to have economic cooperation, including China. Let’s remember that we are talking about $370 billion. And, he adds, “We are putting investment where there was already industry before, we are giving a second chance to places because there are people out there waiting for jobs.”
The construction of the supply chain is to take place on the continent and is to serve the US. However, it is largely based on foreign companies. Even entities from Poland are looking at opportunities to invest in the US. During the aforementioned EVS36, the Polish Chamber of Trade Investment (PAIH), together with the Polish Alternative Fuels Association (PSPA), presented selected Polish companies in the field of electromobility. Elimen Group – a manufacturer of electric motors, Ekoen – a network of charging hubs, Ekoenergetyka Polska – a manufacturer of DC charging stations, Impact Clean Power Technology – a manufacturer of batteries and Wilbert – a supplier of charging stations – were there.
As Sexton assures, support for investment is not difficult to come by. The first effects of this approach can already be seen. Companies with European roots are locating their priority investments in the US. The Norwegian battery start-up Freyr, for example, chose the USA rather than the Fjords as the location for its first factory. The country, moreover, has quickly mapped out the areas in which to operate and is preparing its response to the IRA. Priorities have been set: offshore wind, hydrogen and battery production.
In contrast, EU action has been called tardy in many quarters. However, it is worth remembering that the history of supporting green business in the EU is much longer than in the US, and climate policy has been pursued in multiple tracks. The EU approach is one of investment, building manufacturing and research capacity, closing the circular economy – with regulatory support. The US tax credit system is really about reducing the running costs of production over the next 10 years. And then what?
Julia Poliscanova, Senior Director, Vehicles & Emobility Supply Chains of the Brussels-based think tank Transport & Environment, believes that the EU should make it easier for countries to act. More determination is needed to create a single market. The current approach may not work. What is at stake is the ability to quickly implement solutions in countries less wealthy than Germany, France and Italy, who are becoming the biggest beneficiaries of support schemes for green investments in the EU. Poliscanova also stresses that a different look should be taken at the subsidy schemes for electric vehicles – in her opinion, such a scheme should not be given to cars whose manufacturers are already getting facilities outside the EU. “We are leading to a situation where a car produced thanks to subsidies in, for example, China, gets an additional subsidy in the EU. This will not benefit domestic business,” Poliscanova says.
This article was produced as part of the Heinrich Böll Stiftung Transatlantic Media Fellowship.