US environmental subsidy threatens Irish factory plan and industrial relations

Asked for comment on the planned investments and new US subsidies that threaten to lure the facility out of Ireland, the corporate ministry said “discriminatory actions” by the Americans “could undermine the general intention of working together”.

The manufacturing facility for thousands of vehicles – which is expected to bring “high hundreds of jobs” with it – can now go to the US because of EU state aid rules, Crowley said. With US President Joe Biden enacting his Anti-Inflation Act in August and introducing massive subsidies for green projects, there is now an increased incentive for a number of companies to locate in the US.

The facility’s location is expected to be determined in the next three months as orders are already coming in. Crowley said changes to EU state aid rules are needed to allow the government to compete with generous US subsidies here.

The company has developed a specialized software platform that facilitates the conversion of light mining industry vehicles – often four-wheel drive vehicles manufactured by Toyota – from diesel to electric. The proposed partnership with two major manufacturers is “a very large-scale joint venture to ultimately supply hundreds of thousands of electric mining vehicles,” Crowley said.

The deal would mark a massive breakthrough for Cool Planet, which is partly owned by a French private equity firm. The company suffered pandemic-related losses of about 10 million euros in 2020, but has since focused on developing a software platform to control specialized electric vehicles.

Because of these losses, the Irish government is barred under EU law from providing grants to the company for several years. There are no such restrictions on the new US subsidy regime, and restrictions are less onerous in other EU countries such as Portugal, he said. Both countries are now in contention for the manufacturing site bid, although the software element will remain located here.

Last week the financial times reported that European Commission President Ursula von der Leyen has promised that the EU will “simplify and adapt” its rules for companies lured by US green subsidies, but it may be too late.

A spokesman for the Enterprise Department said: “The Irish Government attaches great importance to a positive EU-US relationship”.

“We applaud US ambitions on climate change with public investment for green transition. However, some of the discriminatory measures in the Anti-Inflation Act may contradict the general intent to work together as like-minded partners to address common challenges. We hope that the EU-US task force will be able to address these issues,” he said.

“The EU and the US have a long history of friendship and mutual respect. As is often the case, friends can have differences of opinion and Ireland supports continued Commission engagement with the US on the Inflation Reduction Act, including through the Taskforce, with the aim of ensuring the EU is not unfairly disadvantaged by the US approach.

“Ultimately, a subsidy race is in nobody’s interest. Indeed, as a small Member State, Ireland has benefited from a robust state aid system that underpins a level playing field,” the spokesman said.

A spokeswoman for Enterprise Ireland said it was “aware of the issues Irish companies face in relation to EU state aid rules in the context of international industrial policy and is working with the Department for Enterprise, Trade and Employment on behalf of our clients (DETE) together, which has taken responsibility for EU state aid control in Ireland.”