LONDON (Reuters) – Europe is not providing sufficient incentives for companies such as fertiliser producer Yara to transition to green technologies in stark contrast to the United States, the chief executive of the Norwegian company said.
“From a business perspective it would make much more sense to expand in the U.S. and that is what is happening now across the board,” Svein Tore Holsether said in an interview.
“(We) risk losing both our ability to decarbonise, but also some of the most important industrial companies as well. And that should be a major wake-up call for Europe.”
Holsether said the U.S. Inflation Reduction Act, passed in 2022, provides strong financial incentives for companies to invest in clean energy.
Washington’s $369 billion Inflation Reduction Act subsidises products from electric cars to solar panels, and has sparked fears in Europe that it will coax away investment at a time when the EU needs huge investments in clean industries to meet its 2030 emissions-cutting targets.
Leaders from the 27 EU member countries will discuss their joint response at a Feb. 9-10 summit, with countries including France pushing for urgent measures to retain European industries.
“The U.S. comes with a carrot and cheap energy while we (Europe) have a stick and expensive energy,” Holsether told Reuters, describing the application process in Europe as cumbersome with uncertain outcomes.
Yara, one of the world’s biggest fertiliser producers, has signed deals to deliver fertilisers produced without using fossil fuels, most recently with El Parque Papas, Argentina’s biggest potato farmer, which would be produced at a plant in Norway.
To expand the programme would need a huge amount of renewable energy.
“That is where Norway and Europe need to speed up. That is an important message to policymakers, make an enabling environment to do this at a scale we have never seen before.”
Asked about ammonia, which plays a key role in the manufacture of fertiliser, Holsether declined to give an update on European production which Yara said in October was running at 65% capacity.
“Since then, the fundamentals of it being unprofitable to produce ammonia in Europe have been largely unchanged,” he said.
Yara slashed ammonia capacity utilisation at its European ammonia plants in August to just 35% as a result of a surge in gas prices.
(Reporting by Nigel Hunt and Karin Strohecker in London, Kate Abnett in Brussels; editing by Jason Neely)