Thursday, May 18, 2023

Green bonanza spurring corporate greed

Call it the tyranny of the green revolution. The recent stand-off over the Stellantis-LG electric vehicle battery plant planned for Windsor, Ontario, is just one front in a trade war that looks set to continue and spread.

Long before Joe Biden introduced his Inflation Reduction Act (IRA), which allocated billions of dollars to expanding the US's green energy- and climate change-related industries, Amsterdam-based Stellantis and South Korea's LG formed a partnership and negotiated a project to build a $5 billion EV battery plant in Ontario, Canada, with $1 billion in federal and provincial support.

It seemed like a good deal for all concerned. But then came the IRA, and suddenly the clean-tech industry's horizons opened up, both in the US and in every other country that found itself competing against the Yankee dollar. It was in this heady atmosphere that Volkswagen negotiated a huge (and controversial) $13 billion sweetener from the Canadian government to locate an EV battery factory here rather than in the US. 

Then, rather belatedly, Stellantis realized that it too could benefit from this green bonanza, and suddenly reopened the Windsor plant deal, claiming that the federal government was not living up to its commitments ("not delivering on what was agreed to"). It immediately downed tools and stopped construction until it receives a VW-sized incentive payment from Ottawa. In effect, it is trying to blackmail the government, because it thinks it can.

In fact, it was a done deal months ago, and it is actually Stellantis that is not living up to its commitments, as it looks to cynically capitalize on the starkly changed landscape. I don't know how they can do that legally, but Stellantis clearly sees itself in such a strong position that it is going to browbeat the Canadian government into handing them yet more corporate welfare billions.

And if you don't believe that this is just Stellantis trying it on, it has also just threatened to pull out of a proposed battery plant in Britain (and re-locate it to North America, where they apparently offer all sorts of good government subsidies) if it won't re-negotiate the deal. Like Canada, Britain needs the batteries, and is stuck between a rock and hard place. And Stellantis, firmly in the driving seat, knows this very well.

The USA's IRA was a groundbreaking piece of legislation, and evidence that Biden at least is very serious about improving America's green credentials. But it is also having all sorts of unintended consequences far from America, and spurring on corporate greed to hitherto unknown levels.

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