The U.S. And China Outpace Europe In The Energy Transition Race

One aspect of this energy transition that makes it so complex, difficult to manage and near-impossible to keep on track comes in the disparate operating conditions that exist across nations. From regulation, to tax policy, to available subsidies, to natural resources, to sourcing talent, to supply chains, every one of the 193 nations on earth presents its own unique operating environment within which management and CEOs must work.

One such CEO is Lars Carlstrom, who leads startup ventures in the US and Italy after having led a previous venture in the UK. These new ventures, Statevolt in the US, Italvolt in Italy, seek to secure a share of the booming market in the manufacture of batteries for renewable energy storage and electric vehicles. It is a sector that appears to have almost unlimited growth potential, but one that also involves a high degree of risk and uncertainty in a constantly evolving and highly competitive economic and public policy environment.

When I asked Carlstrom recently to compare the approaches being taken to moving the transition forward in the US and Italy – much of whose public policy is dictated by the EU – his answer was swift and certain. “It’s a huge difference between Europe and America currently,” he says. “The whole transition is, from my point of view, in jeopardy. You’re risking your whole automotive industry. I think, without very quick action, Europe could have potentially already lost its industry.”

One of Carlstrom’s big concerns about the future of the European auto industry comes in the form of competition from China. The ability of China’s government to approve mines and power installations with very little lead time, enact new subsidies for specific business areas and invoke immediate policy shifts gives it a huge advantage over the democracies in the West. This nimbleness has also enabled it to dominate supply chains for all manner of minerals and manufactured products like solar panels, EV batteries and even the EVs themselves.

“For all of the efforts of countries like Italy, the unavoidable truth is that China is 20 years ahead [of the West] at least,” Carlstrom points out. “They have control over all the minerals and now the Germans have been in China to teach them how to build modern, high performance cars. These cars are now coming back to Europe. Worse, these cars have come to be subsidized by China’s government, so they’re going to sell them extremely cheap, undercutting domestic industries. China’s inroads into selling their high-quality EVs into the EU market is in turn making it increasingly difficult for legacy automakers like Fiat, BMW, Volvo and others to maintain market share.

Carlstrom says time for Europe to readjust its approach has grown short. “If you can’t cure this in what is now really the 11th hour, then we could have a recession in Europe for decades.” Noting the auto industry in Europe represents millions of jobs, he adds, “if you lose those jobs, I can see a future where Europe would be a tourist park. It’s not a good situation. I’m extremely worried actually.”

The rising Chinese competition in the EV space played a part in convincing Carlstrom and his team to also focus the business plan for both Statevolt and Italvolt mostly on production of stationary batteries for renewable power generation storage.

“We are now positioning ourselves more towards energy storage,” he says. “Firstly, it is easier to produce, and secondly it’s less risky, and it’s also a better return. There is a great need for these products, for balancing the grid, for solar parks, wind parks and so on. They are also needed for America, which has an aging grid. So, you need a lot of these battery cells in America. It’s a good opportunity.”

For all the complaints in the US about the slowness of the permitting processes and government agencies, Carlstrom says the situation in EU countries is even more difficult and bureaucratic. In our interview, he praised the local officials in the Southern California area around the Salton Sea, where the Statevolt operation is sited, for their efforts to speed the job-creating project along.

In Europe, they’re not used to such big projects as ours represents,” he notes. “America is used to big projects – it’s a different mindset, and that also creates some turbulence for our Italian project, where we are talking about up to €3 billion in investment. It’s a lot of money. In America, they’re used to big numbers, they like big numbers.”

Carlstrom pointed out that officials in Italy have also worked hard to facilitate the progress of the Italvolt operation. But the additional layers of EU bureaucracies and processes inevitably lead to additional roadblocks and longer timelines. At the end of the day, he says, “we either need to super accelerate this, or postpone it.”

At the moment, neither option appears to be under consideration in Brussels or Washington, DC.

Read the author’s full story here

Get Best News and Web Services here

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button