ByAlex Kimani– Mar 04, 2025, 11:00 AM CST
- European manufacturers face intense competition from cheaper Chinese imports, pushing some companies to relocate to the U.S.
- The European Commission launched CID to boost the competitiveness and decarbonization of European industries, committing over €100bn to support clean manufacturing and energy independence.
- While the U.S. had previously been attractive for clean energy investment, President Trump’s freezing of IRA grants has put hundreds of projects on hold.
Last month, the European Commission launched its Clean Industrial Deal (CID), an initiative designed to boost the competitiveness and decarbonization of European industries. CID is a roadmap for transforming Europe’s economy into a circular, resilient, and decarbonized powerhouse. Under CID, the EU plans to mobilize more than €100bn to support EU-made clean manufacturing, including a further €1bn in guarantees under the current Multiannual Financial Framework. The EU has set a goal to achieve climate neutrality by 2050.
The European Investment Bank (EIB) Group will introduce new financing instruments to support CID. These include a grid manufacturing package for producers of grid components as well as a joint European Commission-EIB pilot programme for power purchase agreements (PPAs) targeting small and medium-sized companies and energy-intensive industries. CID aims to speed up the deployment of clean energy, encourage electrification and complete Europe’s internal energy market through physical interconnections. It also aims to cut the continent’s reliance on imported fossil fuels.
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In effect, the EU is looking to meet two seemingly conflicting goals: On one hand, the bloc is trying to deliver a climate-neutral industry whilst, on the other, remaining competitive in the global market. Europe’s clean energy sector has been struggling amid intense competition, mainly from China. Last year, Swiss solar module maker Meyer Burger announced plans to wind up panel production in Germany and set up shop in the United States thanks to stiff competition from Chinese-made panels as well as helpful policies and money incentives in the U.S.
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Talks between the company and the German federal government to try to secure a future for the factory ended without success, forcing the company to close its plant in Freiberg in eastern Germany, with an attendant loss of 500 jobs as well as a 10% reduction in European solar panel production. The tough choice by Meyer Burger came amid a tough market in Europe, thanks to the market being flooded with cheap, mainly Chinese, solar panels. The company pointed out that, unlike manufacturers in the U.S. and China, European manufacturers are struggling with no strong government policies to support them. According to global energy research firm Wood Mackenzie, China solar panel manufacturers are able to produce panels at a cost of just 12 cents per watt of energy generated, compared with 30 cents in Europe. U.S. subsidies announced under the IRA allow some renewable energy manufacturers and project developers to claim tax credits. According to the U.S. Department of Energy, starting in 2023, awardees are eligible for an Investment Tax Credit (ITC) of 30% of qualifying investment if they satisfy the labor requirements issued by the Treasury Department for any labor associated with re-equipping, expansion, or establishment of the manufacturing facility.
“We made a bold move in the absence of any industry policy support in Europe and shifted a solar cell expansion project from Germany to the U.S.,” Erfurt told Reuters in an interview.
Meyer Burger CEO Gunter Erfurt talked up the U.S. market, propped up by sweeteners such as the 45X is a production tax credit (PTC) under the IRA and maybe a loan from the U.S. Department of Energy. Further, the company expects additional support from the German government’s export agency.
Similarly, battery company Freyr, which operates mostly in Norway, stopped work at a half-finished plant near the Arctic Circle and plans to relocate to the U.S. and establish a plant in the state of Georgia. Freyr announced it had changed its registration to the U.S. from Luxembourg.
“We did spend quite a bit of time trying to really make sure that we weren’t committing a mistake. We got to the point where we concluded that that form of policy level response was not forthcoming,” Birger Steen, chief executive of Freyr, disclosed, adding that the company first hunted for support from the Norwegian government.
Meyer Burger and Freyr are hardly an isolated case: at least 10 European solar companies have reported facing financial difficulties. Manufacturers in the continent have been pushing the European Union to take urgent action to protect the industry from the growing danger of going under. The unfolding situation poses a dilemma for European governments amid the continent’s booming clean energy sector : Either offer more support to local companies to ensure they remain competitive or allow cheaper imports to keep flowing in.
Not Coming To America
Europe’s Clean Industrial Deal is likely to encourage clean energy manufacturers in the continent to continue their operations there, with the current U.S. administration offering even less incentive to relocate. President Donald Trump froze federal grants, and the clean energy sector is beginning to feel the heat. Billions of dollars in fully obligated grants, including those under the Inflation Reduction Act (IRA), remain frozen despite two court orders requiring the Trump administration to release the money.
“Look, we’re frustrated, right?” Mike Foley, the administrator of Cuyahoga Green Energy, a public microgrid and renewable energy utility in Cuyahoga County, Ohio, told Politico. “These were hard grants to get. We want to move forward with them and do the work.” Foley’s company and its partners are working on three IRA grants worth hundreds of millions of dollars.
He is not alone. Hundreds of projects like that one are waiting for a green light from Trump’s new EPA team. EPA’s acting financial chief, Gregg Treml, sent a memo advising that IRA and infrastructure funds would be released following a court order. However, a list of programs released later by the agency showed that all but one IRA grant program remained frozen.
Politico estimates that companies have announced plans to build or expand an estimated 555 manufacturing facilities thanks to generous IRA benefits. But here’s the kicker: less than half of the 230 facilities that were slated to commence by the end of 2024 beat the deadline, meaning that over 60% of IRA investments are now at the mercy of the Trump administration.
That said, Europe’s oil and gas companies might be interested in an American listing under Trump. British multinational oil & gas giant, Shell Plc (NYSE:SHEL) has threatened to delist from the London Stock Exchange (LSE) and list on the New York Stock Exchange (NYSE). Shell CEO Wael Sawan told Bloomberg that the company is grossly undervalued in London due to shareholder apathy to the oil and gas sector. Sawan has also expressed deep frustration by investors’ under-appreciation of the financial performance of the company, as well as the British government’s over-taxation of its profits. Sawan has vowed to “look at all options”, including switching the group’s listing to New York in a bid to close the valuation gap with American Big Oil companies Exxon Mobil Corp. (NYSE:XOM) and Chevron Corp. (NYSE:CVX). The company’s share price is now close to a record high, thanks in part due to the geopolitical upheavals of recent years that have supported higher gas and oil prices. Still, Sawan believes the shares are undervalued.
By Alex Kimani for Oilprice.com
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