September 14, 2023

Want to capitalise off America’s $369bn climate bill? Here’s how

The Inflation Reduction Act is the largest climate package in history

Freya Pratty

6 min read

Lexie Yu

Battery manufacturer FREYR may have its roots in the wilds of northern Norway, but its future is across the pond, in America.

According to a statement to the US Securities and Exchange Commission (SEC) this week, its headquarters will move from Europe to the US. FREYR has already confirmed its next gigafactory will be in Coweta County, Georgia, rather than Norway. 

It's not alone. Since the announcement last year of America’s Inflation Reduction Act (IRA) — a mammoth bill channelling $369bn into green technologies — an increasing number of European founders are moving their operations to the US, lured by the promise of attractive tax credits. Meanwhile, in Europe, most government climate tech incentives don’t directly put cash in company pockets. 

“We have always had an ambition to produce next-generation battery cells on both sides of the Atlantic, but because of the IRA we are moving faster in the US,” says FREYR’s cofounder, Tom Jensen. 


“The IRA is the most ambitious climate act in history, and one year after it was signed into law, it is forecasted to generate roughly $1.7tn of new investment in the US over the next decade.”

Freyr's planned gigafactory in Georgia.
Freyr's planned gigafactory in Georgia.

Others heading stateside include British electric van startup Tevva, which this month announced it’s relocating its headquarters and manufacturing to America, and leading direct air capture startup Climeworks, which has launched plants in the US and praised the IRA bill as it did so. 

So how can other startups get a piece of the largest climate bill in history? Sifted spoke to founders, investors and consultants for their tips. 

No need to move your HQ

Companies don’t need to move their headquarters to the US to qualify for the IRA bill; they just need to be manufacturing and selling from the country. Analysis shows that 12 months into the IRA bill, 15 of the 20 largest projects to qualify are run by companies based outside of America. 

In some sectors, like batteries, there is a requirement that a certain amount of components are also sourced from the US.

Consider what stage you’re at

The majority of the IRA bill is geared towards growth-stage companies working on the rollout of infrastructure and products — companies Sifted refers to as infrastructure startups — rather than startups working on lab or demonstration scale tech. 

“You need to offer a scalable solution because the whole idea of IRA is about scaling up green technologies,” says Verus Plotho, founder of VVP Consult, one of a nascent but growing industry of consultancies focused on helping European companies move to the US. 

That said, European startups working on early-stage proprietary tech may choose to partner with an industrial partner in America to scale operations there when they’re ready to manufacture. 

For example, Oxford PV, a spinout from Oxford University focused on next-gen solar panels, has indicated it’ll head overseas to manufacture its tech, having completed R&D in the UK. 

Work out which tax credits work for you

Most of the incentives the IRA offers work as tax credits, allowing businesses to deduct a certain percentage from their taxes. 


The credits work as either “investment tax credits” (ITC) — where businesses receive a credit to get their plant up and running — or a “production tax credit” (PTC), where businesses are awarded credits for every kWh of clean energy or battery capacity they produce. 

For example, a solar power plant could claim a 30% ITC on the costs it takes to set up the plant, and then a $26 PTC credit per megawatt hour of electricity it produces. 

FREYR expects to earn $1.4bn annually in IRA tax credits once its factory in Georgia is up and running. It’ll qualify for a credit of $35 per kilowatt hour of capacity and $10 for battery modules. 

Incentives are broken down by technology; other packages include:

  • Renewable energy: The IRA bill extends an already existing 30% tax credit (ITC) for wind and solar projects to 2032. Section 45X of the bill also offers owners of renewable energy facilities an annual credit of $26 per megawatt hour produced.
  • EV charging: Section 30C of the IRA offers up to 30% in tax credits per new charger installed.
  • Hydrogen: The IRA offers a tax credit for hydrogen producers with up to $3 per kilogram.
  • Sustainable Aviation Fuel (SAF): The IRA expands an existing credit, the biomass-based diesel blenders credit, to include a per-gallon incentive for sustainable aviation fuels. It starts at $1.25 per gallon and companies producing SAF that reduces emissions by more than 50% can claim extra credits.
  • Carbon capture: The IRA launched a $6bn program in March this year, funding 50% of the cost of new carbon capture projects. 

Tax credits within the IRA bill are transferable, meaning projects can sell their credits on to investors in the open market, unlocking project financing earlier than the credits would. In August, the Bank of America published details of the sale of $580m in wind energy credits from a $1.5bn wind farm project. 

The transferability rule has also birthed a new cohort of startups facilitating tax-credit transfers.

Think beyond tax credits

“The IRA is mostly tax credits, but then you have the Department of Energy’s Loan Programs Office, which has a massive budget,” says Plotho. It offers loans to those building green energy infrastructure. The loans come at a much lower interest rate than those available elsewhere. 

Under the IRA bill, the Loan Programs Office received an additional $12bn to bolster the provision it can offer to green energy developers. 

Make sure you meet labour standards

To claim credits from the IRA bill, companies have to make sure their manufacturing facilities meet wage and apprenticeship standards. This includes giving a certain amount of work to apprentices and ensuring wages match the rates of similar employers in the locality. 

If companies don’t meet the labour standards, they receive a much lower credit value — 6% compared to 30% for the renewable energy ITC, for example. 

There’s also an environmental justice credit, known as LMI, which encourages renewable energy projects in low-income communities. Projects which qualify receive an additional 20% tax credit.

Chat to individual states

Aside from federal-level support from the IRA bill, individual states offer incentives to companies. There have been multiple reports of state delegations touring Europe to make deals with European companies — leading battery startup Northvolt told Sifted earlier this year that it receives solicitations on a weekly basis.

“States are falling over themselves right now. There is a time window of perhaps the next two or three years to install clean technologies in their state,” says Plotho. 

“You can negotiate a deal in advance with the state’s agency,” he says. Plotho recommends searching on each state’s department of energy website to find a contact to chat to. Research what particular states are interested in too, he says — oil-rich states like Texas and Georgia have a particular imperative to build up their clean energy industries. 

It’s important to remember that state-level financing, as well as the IRA itself, are constantly evolving, with new benefits and ways to use incentives being unlocked all the time. One thing is certain: the US is determined to make itself an ever-enticing destination for climate tech founders. 

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Freya Pratty

Freya Pratty is a senior reporter at Sifted. She covers climate tech, writes our weekly Climate Tech newsletter and works on investigations. Follow her on Twitter and LinkedIn