Europe and US locked in ‘greenwashing’ battle for investment?

In companies, it’s called greenwashing – when PR and marketing spin is deceptively used to persuade the public that a product, aim or policy is environmentally friendly.

With climate change high on the agenda following dire warnings and severe climate events in recent years, responsible consumers want to do the right thing. Also concerned about their health, they more readily buy products that carry an organic, bio or green label, even if the items are essentially the same as goods without those terms on their packaging.

It appears that countries or even entire continents might also misuse the politically correct term. Are Europe and the United States now using what could be termed greenwashing as a way to attract investment or retain industries?

The growing competition between erstwhile allies began with a US initiative that gives deep tax breaks to “green” products and investments. Europe sees it as a form of unfair subsidy that can woo companies to relocate across the Atlantic, especially as energy costs in Europe skyrocket.

In response, French Economy Minister Bruno Le Maire hit back last week by announcing France’s own wide-ranging raft of incentives to shore up industries. Germany has already voiced support a European Union subsidy plan, again using the green terminology.

The “green” race demonstrates that when it comes to money, taxes, jobs and political support at home, neither long-standing friendships nor love for the planet are sacrosanct.

The administration of US President Joe Biden has also hung another compelling moniker on its new initiative — calling it the “Inflation Reduction Act” — a nearly half-trillion dollar package that among other aspects offers incentives for “green” production using American components. Big car-making nations like France and Germany view the US law as potentially illegal, saying it discriminates against foreign companies in the electric vehicle sector and encourages consumers to “Buy American”, which could be unfair practices that violate fair trade agreements and WTO rules.

And while Biden and the French President played nice during the current administration’s most opulent state dinner to date in Washington – a formal soiree at the White House in December featuring butter-poached Maine lobster – Macron politely reminded the US leader that his green subsidies are “super aggressive” and insisted that European allies should receive the same treatment as American companies.

Following the tete-à-tete, Biden said, “we’re going to continue to create manufacturing jobs in America but not at the expense of Europe. We can work out some of the differences that exist, I’m confident.”

By early in the new year, France was arguing the concessions fall short and the EU needs to roll out its own subsidies. Also not satisfied to wait for a concerted European program, it is pressing ahead with its own national scheme. Le Maire said the new bill would include a wide range of incentives to encourage green industries to stay or bring back production plants to France.

“In the coming days, I will propose a bill on green industries that will include tax, regulation and legislative measures to accelerate the installation of industrial sites in France,” Le Maire told French radio. Those initiatives include “green hydrogen, electrolysis, electric battery production, nuclear energy and renewable energies”, he said.

Statements from Washington last week indicated EU companies could benefit from a tax credit scheme for commercial clean vehicles — a move Brussels sees as a welcome first step — but the EU Commissioner for Trade, Valdis Dombrovskis of Latvia, said that is far from enough.

While there are signs of movement by the Biden administration on electric vehicles and batteries, that development would only alleviate some of the issues, Dombrovskis said in an interview. “Those outcomes would solve part of our problems, not all of our problems,” he said.

“When this work is over we will need to take stock of where we are and see what our options are,” said the EU’s top trade commissioner. “We would need to look at further at how to rebalance the playing field.”

As last year drew to a close, European Commission President Ursula von der Leyen said in a speech to the EU parliament that “supporting the clean transition is the right thing to do if you do it right – in a transparent manner, in a spirit of cooperation and in a way that ensures a level playing field”.

“It should be a race against time, not a race against each other. It should be a race to the top, not a race to the bottom,” she said. She called out the massive US package for its “Buy American” logic, tax breaks and production subsidies that “could disadvantage European companies”.

“We need to address these issues. We need to give our answer, our European Inflation Reduction Act,” she said.

Only the most foolish or cynical would argue against massive government efforts to help the environment through measures that have a real impact – money and incentives to business. Let’s hope the new competition leads to actual reductions in harmful emissions and not just moves in a game of global industrial one-upmanship.

Consumers who have purchased a deceptively termed “green” item are increasingly wary and weary of the label. That also applies to political promises. The real color should be true-blue sincerity.

- Jon Van Housen and Mariella Radaelli are international veteran journalists based in Italy

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