EU vs US funding for cleantech companies

There has been much debate about opening a company in Europe versus the United States. Europe is concerned about losing cleantech companies to the US due to the greater availability of funding there. The US offers a clear and substantial $369 billion under the Inflation Reduction Act over seven years, primarily in the form of subsidies and tax incentives.

According to a recent report published by the European Commission, the EU has similar funds, though accessing them is trickier. The EU, like the US, has allocated significant resources to support cleantech and sustainability initiatives. The key difference lies in how these funds are structured and distributed.

While the Inflation Reduction Act in the US offers a clear and substantial $369 billion over seven years, primarily in the form of subsidies and tax incentives (with much more funding available through private capital), the EU's approach is more multifaceted and complex. The EU's financial support for cleantech is spread across various budget allocations, making it less apparent and potentially cumbersome for businesses to navigate.

The funding is available in the EU, but it may not be as immediately visible or easy to access as the US equivalent. According to the report published in late October by the European Commission, in the seven-year period from 2021 to 2027, 32.6% of the total EU budget, or €578 billion, will be allocated to climate action. This is in addition to national subsidies and tax credits granted by EU member states. However, assessing how this funding is distributed is difficult, while the US IRA offers a more attractive investment landscape because of its certainty, not solely due to the amount of money available.