Not a week goes by without an announcement, here or there in the world, of an investment in a battery manufacturing plant for electric vehicles – the famous gigafactories: so much the better for the transition in the mobility sector where everything remains to do in terms of reducing emissions! Thus, in France, what is now called the “battery valley”, in Hauts-de-France, could see the establishment of a fifth gigafactory while the Skeleton company is looking for a new production site in Europe. In the United States, Stellantis and Samsung announced the construction of their second joint battery factory in Indiana.
The gigafactory is becoming the measuring stick for the marriage between green transition and reindustrialization. It is also the barometer of the fierce competition that has opened up in the sector, at all levels: between regions in France, between Länder in Germany, between European States and, obviously, between Europe and the United States. In this regard, even if it is still too early to draw a real assessment of the Inflation Reduction Act adopted in the summer of 2022, let us focus on the few trends that are already emerging.
When this American law was passed, the capacity, in the European Union, of battery projects by 2031 was 1,100 gigawatt hours (GWh) while the United States stagnated at around 750 GWh. In less than a year, in April 2023, the curves crossed to the benefit of the United States and, in August 2023, American projects jumped to 1,200 GWh compared to 1,150 for the European Union. The European curve is stagnating while that of the United States is skyrocketing. In other words, the leverage effect of the tax method chosen by the United States is working to its fullest: the private sector, stimulated by tax reductions which are combined with guaranteed loans, is investing massively in transition technologies. Conversely, Europe seems bogged down: energy costs are weighing it down, as well as the difficult readability of the Green Deal for investors, where it only takes a few minutes to understand the mechanics of the IRA.
Two different approaches
Two continents, two philosophies: the energy transition is being built in the United States as a gigantic partnership between the public and the private sector. Companies are the armed arms of a State which, via taxation and its guarantee, offers them visibility and therefore security of investment. The whole system is organized around and in favor of the final beneficiary, the company: in private sector jargon, we would say that it is customer-centric. A brief visit to the Commission’s Internet pages presenting the European Green Deal reveals, on the contrary, an edifice and an intertwining of measures centered on public power, whether called Commission, Council or Parliament. As for the visit to the France Nation Verte website on ecological planning, it teaches us that “planning today means offering everyone – citizens, local authorities, businesses, associations – a path to succeed collectively and individually in reducing our ecological footprint. The company is only seen as one entity among others, even though its financial and technological resources are the keys to avoiding an excessively expensive transition and to favoring freedom over constraint.
From this point of view, it is necessary to read the series of reports that the American Department of Energy has regularly published since March 2023, collected under the name Liftoff Reports: their objective is, for each key technology of the transition, to identify “market opportunities, current challenges and solutions for take-off [NDLR : “lift off” en anglais] clean energy technologies”. Advanced nuclear, hydrogen, carbon management: these reports are a mine of clear, quantified, educational information on decarbonization technologies, on the industrial, economic or human resources challenges that they must resolve , and on the public support they will receive. They illustrate what a transition policy devoid of ideological bias, technologically neutral, is, even more to the extent that they are the fruit of partnership work between the public and the private.
There is, of course, much to be done to make the American grass greener than the European, as shown by figures recently released by the European Investment Bank, indicating that European companies are investing more in the transition than their counterparts American. But at least we understand, by looking at American policies and initiatives, that the grass will be better watered there than in Europe, thanks to low energy costs and massive public and private investments. It is therefore likely to grow very quickly…
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