Welcome to the Euro Intelligence Podcast. This is our last podcast of the year, and today we are talking about the Inflation Reduction Act and the reaction to it from the EU.

With me are Zazana Muncheng and Jack Smith. Jack, we have written about the inflation reduction acts, which we don't call IRA for reasons that Europeans

probably know better than Americans. We have written about the inflation reduction act extensively

this week. It's in many respects a perfect storm for the Europeans. Can you explain that?

Yeah. So, I mean, what kind of worries the Europeans is, really, it's a combination of two things, right?

One of them is the extent to which the US is now going to be putting subsidies into their green industries, literally talking hundreds of billions of dollars worth of subsidies.

This is an enormous bill.

And the second thing are the basically

the made in America provisions about. Those are the things that they're worried about, which is number

one, lots of subsidies and number two, these made in America provisions, meaning that production

and industries go over to America rather than in Europe. So what you're dealing with there is that.

And I think that's coupled with some other structural factors that also help the US. And lower

energy costs is one of them. So I'm sure as many of our listeners are aware, the US does not really face the same gas problems that Europe does, quite the opposite.

For many American companies, this is very good for them.

And the US is in and of itself a major natural gas exporter.

In terms of oil, which I think is going to become a bigger worry for Europe, especially on the refined side going into next year.

The U.S. has more robust security of supply, which is to say that they produce a lot of their

own oil and much of the oil that they import they get from Canada.

There's also deeper capital markets in the U.S., which we've talked about before.

And between those things, it eventually

becomes a very compelling proposition for companies to take their production over to the US

instead of Europe.

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