France unveils its green industry bill to rival the U.S.

The Yahoo Finance Live team discusses France's new green industry bill that challenges U.S. initiatives to shift businesses into operating in a lower-carbon emissions economy. In the bill, the French government will budget half a billion euros annually for tax credits given for environmentally-friendly operations.

Video transcript

AKIKO FUJITO: Let's move on to another story. A bit of a pivot, guys, but one story I'm watching today has been this global race to attract green investments. The latest headline here coming out of France introducing a bill that would rival the Inflation Reduction Act here in the US. The country is setting aside tens of billions of euros in tax incentives to accelerate the development of clean energy. It also doles out bonuses for electric vehicles based on, number one, the energy makeup of the country where they're assembled; number two, the carbon footprint of the parts as well as components; and then, of course, how much those parts can be recycled. And if this sounds familiar, it's because so much has started to move as a result of the IRA being passed here in the US.

And I want to point to a comment, guys, we got from the French Finance Minister Bruno Le Maire who said, "There's a new, more brutal form of globalization in which everyone defends their own interests with scruples-- with few scruples, and the US and China are in a merciless technological, economic, and financial rivalry." His point being that Europe has to play in that as well.

And if you look at all of the investments we've talked about since the IRA, this is kind of the new norm. If the US passes a big package to attract onshoring of manufacturing, then Europe responds with another one, and we've sort of seen that in the chip space as well.

DIANE KING HALL: It's true. It's true, Akiko. And one thing I thought was interesting, there was a chart that I saw within this Bloomberg piece about-- I didn't realize that only 10% of France's GDP was produced by manufacturing, so there is certainly room for them to try to gain some ground there.

But to your point, right, you've seen different geopolitical-- or excuse me, different countries try to just go inward and, you know, claim some sort territory there.

JOSH SCHAFER: Well, and part of it's about what that funding allows these companies to do, right? You look at a company like First Solar that is expected to really benefit from the IRA. And just yesterday, Akiko, they bought a European company, and the stock soared significantly on that news. If you take a look at a two-day chart of First Solar, it went up massively over the last couple days because it is expected to benefit from the Inflation Reduction Act.

So when you think about what this means for some of the companies, First Solar hasn't necessarily seen it actually in their earnings yet. They were talking about that a lot a couple weeks ago. But they do think it's coming down the line, and that stock has been on a wild ride for over a year now because of how it can benefit from that government involvement.

ALEXANDRA CANAL: Yeah, I think looking at those stocks in the back half of the year is going to be really interesting to see how that plays out in terms of those investments. But yeah, Akiko, going back to that French minister quote, I mean, brutal form of globalization. No scruples. It was very intently worded, and I do think this just goes back to that act being passed and how the US has really set the precedent here that others will follow.