Yahoo Finance Joe Biden’s green subsidy lures French energy giant in $2bn blow to EU
French energy giant Total has announced plans to build a $2bn (£1.6bn) synthetic gas plant in the US, dealing a fresh blow to Europe’s green energy aspirations.
The project, which will be jointly developed with Belgian start-up Tree Energy Solutions, will make so-called e-natural gas from hydrogen and carbon dioxide.
It is expected to receive subsidies through the Inflation Reduction Act (IRA), a flagship law passed by Joe Biden’s administration which both companies credited for their decision.
Stéphane Michel, president of gas, renewables and power at TotalEnergies, said: “The United States has many advantages for the development of our first e-NG project, including well-developed gas infrastructure, growing renewable power generation capacity, and significant public subsidies.”
He said that e-gas would “contribute to the energy transition by helping our customers to decarbonize their activities, notably the ones that are difficult to electrify”.
Marco Alverà, chief executive of Tree Energy Solutions, added: “This groundbreaking project testifies to the effectiveness of the Inflation Reduction Act.”
Both the UK and Europe have struggled to respond to the IRA, which politicians across the EU have warned could help the US hoover up investment from European energy, automotive and technology companies.
Jeremy Hunt, the Chancellor, is expected to unveil the UK’s policy response this month, while the EU has unveiled a “Green Deal Industrial Plan” which aims to provide more regulatory certainty to firms while relaxing state aid rules.
However, the IRA offers enormous tax credits for zero-carbon power production, a factor that can transform the business case for developing industries.
For example, starting from 2023, businesses can receive $3 for each kilogram of green hydrogen that is produced in the first decade of a plant’s operation, with payments increased by 2pc annually.
Some companies have even said they are thinking about moving operations across the Atlantic altogether to maximise the benefits they get from the subsidies.
Total says it aims to produce 100,000 to 200,000 metric tons (up to 200 million kg) of e-natural gas per year.
The hydrogen will then be combined with “biogenic” carbon dioxide – CO2 that is emitted by burning fuels such as biomass such as wood pellets or biogas – to make the e-gas.
