The panel discussion summarized Europe's responses to the US Inflation Reduction Act and challenges in accelerating the green transition. Key points included: - The IRA provides subsidies to boost US green tech and manufacturing, disadvantaging European companies. The EU responded with the Net-Zero Industry Act to boost domestic production. - Funding is complex in Europe versus the simple, "fire hose" approach in the US. European companies also face a reliance on China for critical materials. - Partnerships will be important to secure materials from Africa but regulations make investing difficult. The EU aims to prioritize batteries and hydrogen but changing trade deals will require new approaches. - While legislative actions will help, the decentralized EU may

1. Premium members:
How Europe has Responded to the US Inflation
Reduction Act

2. In the latest meeting of the FT Climate Capital Council,
Emiliya Mychasuk, FT climate editor, moderated a panel
discussion on Europe’s response to the US Inflation
Reduction Act.
On the panel were Pascal Lamy, who is chair of continental
Europe for Brunswick Group and was previously a
director- general of the World Trade Organisation and
trade commissioner at the European Commission;
Matthias Buck, Europe director for Agora Energiewende,
and Andy Bounds, FT Brussels correspondent.
Here are the highlights of the event, which was supported
by Iberdrola and ESRI, premium members of the
FT Climate Capital Council.
Post Event
Summary
1

3. The US Inflation Reduction Act:
risks and opportunities for Europe
The Inflation Reduction Act, signed into law by President
Joe Biden, is a $369bn package of tax incentives and
subsidies designed to boost North America’s green
technology and revive manufacturing.
The subsidies are available to companies in the US
(and Canada and Mexico) or to those willing to work
with US companies or relocate to the US. The size of
the grants has led to fears in Europe that its companies
will be disadvantaged or tempted to move.
Lamy said: “Tradewise the IRA is a confirmation that
the US does not care anymore about the World Trade
Organisation.” He said the US was “one of the fathers
of the WTO” and yet the actions of presidents Donald
Trump then Biden have undermined the WTO.
In particular the subsidy programme “which is reserving
the benefit of subsidies to local content” is “in total
contradiction with WTO rules”.
According to Buck the IRA has changed the equation
for Europe. Until the act was introduced the EU was
considered to be in “a good spot” as a result of its
Green Deal Industrial Plan: the EU policy strategy
which, according to the European Commission, “aims
to provide a more supportive environment for the
scaling up of the EU’s manufacturing capacity for
net-zero technologies and products required to meet
Europe’s ambitious climate targets”.
Buck said the EU had “a very robust framework to
really steer the demand side of our economy towards
net zero”. The IRA has highlighted problems, however:
the weakness of Europe’s supply of critical materials
for green technology and an over-reliance on China,
and the complexity (rather than the size) of Europe’s
funding system.
He said there was enough money but the problem
is that “the simplicity of funding under the IRA is
creating a competitive disadvantage for companies in
Europe”. Lamy put it another way. He said the EU had
“a watering can”, sprinkling funds in all directions. By
contrast the US has a “fire hose” aimed at supply chains.
Bounds said the IRA represented not just a threat but
an opportunity for European companies. “We mustn’t
underestimate the attraction of the US market. If the US
is getting serious about greening their economy … then
that is a massive opportunity for European companies
that have the technology. It is good for business.”
2

4. Europe’s Net-Zero Industry Act:
key features
Bounds said the commission had reacted quickly with
its Net-Zero Industry Act, which is “an attempt to
acknowledge that the EU is far too reliant on China”
for the supply of green technology. He said as much
as 90 per cent of certain parts of solar panels were
made in China.
The new act aims to ensure that 40 per cent of clean
technology is made in Europe; 40 per cent of critical
materials for green technology (lithium, cobalt, etc)
are processed in Europe, and 10 per cent of critical
raw materials are mined in Europe (lithium mines in
Portugal are being discussed in this respect).
The NZIA also aims to encourage nations to make
subsidies available to EU members and so “follow the
American approach” by relaxing state aid rules.
Buck highlighted the fact that Ursula von der Leyen,
the commission president, has unveiled plans for
a European sovereignty fund which is intended
to be “the instrument to support some of the net-
zero projects”. According to Bounds, news on this is
expected “before the summer”.
Independence versus speed
Bounds said the EU faced a stark choice. He said:
“There’s a difficult balancing act between the short
term ‘need for speed’ and the long term ‘need for
independence’ in the green transition.” The EU
has challenging targets for decarbonisation and the
quickest way to hit these is to import from China and
elsewhere. Ultimately, though, the EU wants to be
independent of China and other major markets.
The problem is that the transition takes time and
is expensive.
Rich Europe and the rest
Policymakers face a challenge because the EU’s richer
countries – Germany, France, Italy, Spain – have larger
budgets from which to draw state subsidies. How can
it follow the US and still avoid breaching its
competition rules?
Bounds said one option was to encourage cross-border
projects and share resources.
The fire-hose funding approach:
EV batteries and hydrogen
Lamy said the EU should select one or two critical
elements of green technology to try to compete
globally. He suggested EV batteries and hydrogen but
not solar and wind-power. The EU could then turn its
watering can into a US-style fire hose.
Bounds agreed with prioritisation but said the EU
would need to decide what to import and where from
– if not China. This would require new partnerships
and “a change of mindset on trade deals, which have
become very hard to do”.
3

5. The EU’s catch-22 over
partnerships with African nations
Lamy said the EU should strike partnerships with
African nations to secure access to raw materials.
Such connections would be mutually beneficial and
probably “help the Africans take more value for
what they have in their soil” and ensure they “do not
become too dependent on China”.
Many European companies say, however, that they
face a catch-22: they are willing to invest in Africa but
they have to meet stringent mining regulations. Lamy
said this problem needed to be addressed urgently
and “at the right level”.
The positive approach of
Europe’s heads of state
Striking a note of optimism, Buck said: “Europe is
really starting to get its act together”. He said the
commission’s proposals were being acted on in a
way “you wouldn’t have expected from European
legislators before the war in Ukraine”.
For example, he said the commission had set targets
for offshore wind that would mean an annual “tripling
if not quadrupling” of capacity. These are being
incorporated into EU law. As a result, Buck said: “I’m
actually quite optimistic” as regards the “heads of
state”, who are showing real willingness “to identify
this as a problem”, to “double down” on it and to
recognise that “something needs to happen urgently”.
Why the jury is out on the delivery
of the green transition
Bounds said the legislative moves would “definitely
help”. On the other hand, he said the US focus on
“local content” meant its transition was likely to be
slow, while “the whole way the EU works” means
Europe will struggle to deliver.
Elaborating on this, he said the EU’s problem was that
it does not have “a central authority”. “The European
Commission is there – it’s urging, it’s encouraging,
it’s setting targets, it’s building pots of money –
but I don’t know if that’s going to be sufficient for
something of [this] scale”.
Lamy said the “good news” was that legislative
moves will probably “accelerate the green transition
in Europe and in the US”, but the “bad news” is that it
will give “the north” a “comparative advantage” and
“make the green transition more difficult for emerging
countries”. He said this was the regrettable but
inevitable consequence of countries taking unilateral
positions rather than participating in a “multilaterally
organised transition”.
Buck said the legislative moves were “definitely good
news.” He cited the dramatically increased investment
in the solar PV industry which is three times higher
than the level required to meet the climate targets
in the UN Paris Agreement. On the other hand, he
agreed with Lamy that “the erosion of the multilateral
system of cooperation is a big concern”.
4

6. How much money is to be set
aside for the net-zero transition?
Bounds said the likely figure was about €400bn. He
said: “Some of it will have to come from the European
sovereignty fund but not all of it.” Other sources
could include the unused part of the €800bn in the
NextGeneration EU Covid-19 recovery fund.
Whether the amounts being discussed are sufficient
remains to be seen. A report by McKinsey, the
management consultancy, said $900bn a year was
needed for the US to meet the 1.5C target by 2050.
How do the EU and US laws
relate to each other?
Bounds said the Green Deal Industrial Plan was “the
overarching framework” for all the different pieces of
legislation, including the Net-Zero Industry Act and the
Critical Raw Materials Act.
Questions from the
Online Audience
5

7. The FT Climate Capital Council is supported by its
premium members, Esri and Iberdrola. The members
share their business perspective on climate change.
Our members feature in the following pages. Members’
views stand alone. They are separate from each other,
the FT and the FT Climate Capital Council.
Council Premium
Members
6

8. Europe and the US must work
together in the fight against
climate change
Gonzalo Saenz de Miera, director of climate change
and alliances, Iberdrola
Europe has been at the forefront of the fight against
climate change for decades. The introduction of measures
such as NextGenerationEU, designed to support reforms
and investment in clean technology, sustainable
transport and reskilling and upskilling, demonstrates
the importance the region has placed on transitioning
to a cleaner economy.
But tackling climate change is not a Zero-Sum Game.
Therefore, the Inflation Reduction Act should also be
welcomed as a piece of legislation that will enable the
US to accelerate its fight against climate change.
It is encouraging that the legislation provides a solid
framework with good visibility, allowing companies
like Iberdrola to invest and plan for the future.
Similarly, the Green Deal Industrial Plan promoted
in Europe will help the renewables sector further, by
providing a regulatory framework that is designed
to speed up investment in, and deployment of,
clean technologies.
Recent legislation like the Net Zero Industry Act
demonstrates the EU’s ambition to promote the use of
clean technologies within the region and ensure better
conditions for net-zero projects and investments.
This will help to grow the green economy, creating
high-quality jobs in the process.
Taken together, it’s clear that the introduction of
measures to incentivise green investment in any
market or region can only be good news for the
fight against climate change.
At Iberdrola, we have major investment plans on
both sides of the Atlantic. We plan to invest €47bn in
renewable generation, electricity networks
and storage between 2023 and 2025, with the US and
Europe the leading destinations.
More than ever, it is important for all countries,
governments, and businesses across the world to
work together on tackling climate change.
Still, there is much to do. It is vital that infrastructure
upgrades accelerate if we are to facilitate the transition.
Grids are fundamental to the electrification of the
economy and improving interconnectivity between
countries and states. If renewable energy production
rises at the rate required, global grids must grow both
in terms of capacity and capability in every major
economy - and in record time.
It is also essential that processes such as permitting
continue to be improved. It can still take over five
years to get permits for major renewables projects
that we can build in 12 months.
What is clear is that the solution to achieving
decarbonisation and tackling climate change is not
about one region against another, but through working
together side by side. We are all in this fight together.
7

9. G3963501
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A Geographic Approach to
Investing in Sustainability
and Resilience
Executives face the constant challenge of sustainably
accelerating business growth while promoting the public
good. Whether businesses are enhancing climate resilience
through programs that expand environmental stewardship
and conservation or advancing social equity through investing
in underserved communities, location plays a critical role in
correcting imbalances, inequities, and injustices.
The United States recently passed both the Inflation Reduction
Act of 2022 and the Infrastructure Investment and Jobs
Act, signaling a stark departure from “business as usual”
as a growing number of public-private partnerships seek to
proactively mitigate the impacts of climate change. These
efforts, which currently total over $1.5 trillion, highlight the need
for governments and businesses to utilize a common framework
to identify, assess, and prioritize investment opportunities,
effectively allocating resources where they would produce the
best outcome—inherently spatial considerations.
A growing number of governments and companies are
leveraging geospatial tools, data, and methodologies to
overcome complex challenges like climate change, utilizing a
framework called the geographic approach. The geographic
approach is a way of thinking and problem-solving that
integrates and organizes all relevant information in the crucial
context of location. Policy makers and executives use this
approach to reveal patterns and trends; model scenarios and
solutions; and, ultimately, make sound, strategic decisions that
promote the public good.
The geographic approach begins with establishing a unified
operating picture of business operations, also referred to as
an operational basemap, that empowers brands to understand
the full scope of their activities. As a dynamic representation of
business operations, the operational basemap is akin to a digital
twin of critical functions, from supply chain and manufacturing
networks to distribution channels and trade areas. Once
established, businesses can begin overlaying data on climate-
related risks, environmental impacts, regulatory requirements,
and emissions to better understand the underlying spatial
relationship between their operations and negative
externalities—or capitalize on emerging opportunities.
Although the geographic approach is leveraged in nearly
every industry, the use of geospatial tools and methodologies
has become increasingly vital for rapidly diversifying energy
companies. For decades, these firms have leveraged
geographic information system (GIS) technology as a system of
record to manage land holdings and monitor field assets and
as an essential planning tool for future business development
activities. Today, a growing number of these major energy
brands are utilizing these capabilities to operate more
sustainably, reduce noxious emissions, and look to the future in
the form of renewable energy networks. Collaborative projects
like those led by the UK’s North Sea Transition Authority (NSTA)
are also harnessing the power of geospatial visualization and
analysis from streamlining the transition of oil extraction from
the North Sea to using those same depleted oil and gas fields
for carbon storage, generated by the countries’ major industrial
centers. Efforts like these empower companies to maximize
government-led economic incentives and make purposeful
investments in game-changing initiatives that foster a more
sustainable future for all.
The geographic approach empowers executives with contextual
insights to visualize and understand where investments would
create the most value for stakeholders, enhancing sustainability
and resiliency efforts. As governments around the world
continue to incentivize companies to adopt more sustainable
business practices, the geographic approach will ensure that
investments are allocated in areas that will promote the public
good, optimizing value for all stakeholders.
About the Author
Alexander Martonik, MS, MBA, leads Esri’s
business solutions team for financial services
and insurance. Since 2015, he has worked
alongside GIS professionals from civilian
intelligence agencies, uniformed services,
corporate security, and the private sector.
Through his work, Martonik has influenced geospatial
innovations for corporate responsibility, social equity,
business resilience, market research, and customer
analytics. He graduated with distinction from the national
cybersecurity studies program at California State University
San Bernardino and was a recent Esri fellow of the
University of Redlands School of Business & Society.
Contact: AMartonik@esri.com. +1-909-793-2853, ext. 5753
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