However, in parallel to all of them, there is also another key competition to determine the future big players in the sector, such as the fight for incentives and "facilities" that different governments and institutions are developing.

The objective of these incentives is clear: to attract all those investments associated with the development of key green energy industries. Therefore, different state and community governments are setting in their roadmaps different attractions and regulations with which to establish the best frameworks in order to convince investors and large companies to develop their ambitious plans in their territories.

These institutional movements have been going on for years (both in relation to these and other industries). However, it has been the great interest shown in recent months, which has put the focus on these plans and their prominence, in the face of industrial development in the coming years of sectors such as batteries or hydrogen, to give two examples. Especially in view of the announcements of some countries, such as the USA, which are seeking to give a definitive boost to their candidatures as hubs of reference in the future.

IRA: THE PLAN WITH WHICH THE US WANTS TO LEAVE EVERYONE BEHIND

As we saw in the case of the gigafactories industry, the US (and with them, North America) began to take positions in the battle to lead the energy transition later than other continents such as Asia or Europe. However, since the entry of the Biden Administration in January 2021, the country´s efforts have been focused on accelerating this commitment, trying to develop its own model based on its capabilities, its local companies and different public aid.

In this context, plans have emerged such as, for example, the boost to the electric car industry launched since the beginning of his term in office by President Biden, with a planned investment of more than 175 billion dollars over the next few years to accelerate the sector´s capabilities, as well as to promote its purchase among drivers.

Despite this, the existing competition between regions has led the US to go one step further and strike a strong blow in the fight to attract the attention of investors and companies. Hence, at the end of 2022, it approved what is considered to be the most ambitious plan to date in this regard: the Inflation Reduction Act (or IRA, by which it is mostly known).

This plan contemplates (among other measures) more than 400 billion dollars in new investments throughout the country, with a special focus on industries related to green energy and the reduction of polluting gas emissions. For example, in the case of the production of cells and batteries alone, aid and credits for more than 30.6 billion dollars are expected by 2031, through an incentive model that will take into account the kilowatt/hour per year manufactured by those companies that decide to establish themselves in the North American country.

Similarly, support is also planned for other key technologies such as green hydrogen, with similar financing and support models, which will vary according to the final capacity installed on U.S. soil.

In addition to these financing and tax credits, there are other formulas for the promotion of renewable energies, which seek to broaden the financing options for potential projects to be developed in the USA, thus boosting their attractiveness in terms of economic-financial viability and profitability. It also establishes different mechanisms to reduce the impact of inflation on investment in the energy transition. All of this is financed through new taxes and collection systems such as a special 15% levy aimed at companies earning more than one billion dollars.

In this way, and due to its content, the "IRA" has come to be considered one of the most important measures in the history of investment and promotion of clean energies worldwide. Such is its ambition that other countries have also begun to move towards a response to a new regulation that could turn the current "green" industrial panorama upside down.

ASIA DOES NOT WANT TO BE LEFT BEHIND

Through these measures, the US intends to position itself vis-à-vis Europe, but above all vis-à-vis Asia. Asia is the continent that has so far led the way in technological development and investment in the energy transition, and with which the US wants to close the gap. However, the Asian countries themselves are trying to be agile in their response to this American "onslaught", developing their own incentive plans to maintain and strengthen investment in their territory.

This is the case of Japan, the cradle and investment focus of large companies that are leading the industrial transformation around the energy transition. In order to ensure its positioning, Japan anticipated the final approval of the IRA in 2022 by approving an ambitious package of measures included in a ten-year roadmap aimed at the country´s decarbonization.

Among other prerogatives, new financing formulas were launched through "green" bonds, as well as measures to promote investment in sustainability, which combine both direct economic and regulatory support. Likewise, the development of new financing tools, aimed at establishing new, more attractive and simpler support systems for investors, was also established.

Among these measures, the launch of a new line of action aimed at promoting collaboration and the development of joint strategies among Asian countries for the launch of new green projects is noteworthy. In particular, the aim is to create the concept of a "zero emission community" in Asia, through the development of new investments and the promotion of public-private partnerships between countries and entities in Asian countries.

It is hoped that this program and its deployment could be a first step towards a larger joint strategy to further strengthen Asia´s position in industries such as batteries and hydrogen.

Another of the Asian giants, India, has been focusing its efforts on boosting the development of green and renewable technologies in its territory in recent years. All this through programs such as its investment plan of more than $600 million for the implementation of solar energy infrastructures and associated technologies (such as batteries) in its borders.

In this context, the eyes of industry and leading analysts are on China and its next moves in response to the IRA and the aforementioned invitation to collaborate from other countries such as Japan. After years of leading the subsidy and incentive race (recently considered by Europe as "unfair" and "market distorting"), the Asian giant is expected to respond with new economic programs to ensure its leadership.

WHAT ABOUT EUROPE?

Since its inception, and even more so since the approval of the IRA by the US, this wave of aid has been closely watched by the Old Continent. Above all, the fear that these new incentives could affect the progress and efforts made so far by the European Union to lead the technological and industrial development of the energy transition and weaken its competitiveness in key industries such as the automotive sector.

For all these reasons, since January, different media echoed the intentions of the European Commission to respond forcefully to the pulse launched from other regions. This response materialized (at least partially) on February 1, when the Commission presented the bases of a larger plan that will be extended at the end of March and that seeks to increase the region´s competitiveness in the industry associated with the energy transition and "zero emissions".

Specifically, the so-called "Green Deal Industrial Plan" will be based on four main pillars to face the US and the Asian giants. These bases (pending further development) are:

• The establishment of a regulatory framework to facilitate technological development and the extraction and reuse of key raw materials for the technologies of the future.
• The launching of coordinated financing plans at both Community and state level.
• The implementation of plans to strengthen and qualify the workforce for European industry.
• The conclusion of ambitious commercial collaboration agreements with key third countries (such as Chile and Australia due to their natural resources), which could become strategic partners in the race to lead the energy transition.

We will still have to wait and see how these EU intentions "land" in the detailed regulatory framework that it expects to publish before the summer of 2023. Probably, due to its ambition, this program will give numerous headlines to consider and implications to analyze, which we will detail in future blog posts.

What is clear is that, beyond the technological or business development itself, we are living through another fast-paced "race" between countries (and economic interests) that is expected to contribute to accelerate (at all levels and countries) the commitment to decarbonization and energy transition and the achievement of the sustainable development goals set for our future.