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(Bloomberg) -- Inside one of Europe’s biggest asset managers, there’s growing concern that Republican efforts to gut legislation supporting key industries such as clean energy may result in the US losing its status as a destination for investor capital.
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“For investors, the message is clear: The US may no longer offer the reliable investment runway it did just months ago,” said Alex Bibani, a London-based senior portfolio manager at Allianz Global Investors, which oversees some $650 billion in assets.
The decision by House Republicans to pass a tax bill that would do away with many of the incentives contained in the 2022 Inflation Reduction Act threatens to upend investment strategies premised on the clean energy-transition. Even if the Senate votes to block some of the House proposals, European asset managers still have to contend with a new level of uncertainty and volatility that may ultimately force them to turn elsewhere, Bibani said.
“Project economics, supply-chain commitments, and capital flows may now pivot toward more stable jurisdictions like Canada or the EU, unless clarity is quickly restored,” he said.
It’s the latest wedge dividing Europe, where emissions reductions are anchored in law, and the US, where the Trump administration has mounted a full-throated attack on net zero policies. The bill agreed by House Republicans is even “worse than feared” for investors committed to energy transition strategies, according to equity analysts at Jefferies.
A repeal of the IRA “would mark a sharp reversal in US clean-tech policy,” Bibani said. That would inject “significant regulatory and political risk into the market, undermining the policy certainty and financial predictability that made the US the world’s leading destination for clean tech capital post-IRA.”
Key Republican senators have already signaled opposition to the House bill. But if passed without revision, it would be the biggest blow to clean power yet from the Trump administration.
The S&P 500 Index fell last week, while the yield on 30-year US Treasuries rose as high as 5.1% as markets digested news of the Republican bill, amid estimates it will add trillions of dollars to the deficit. President Donald Trump then ended the week by injecting further uncertainty into markets as he escalated the tariff war with the European Union, even declaring he’s “not looking for a deal.” The dollar fell.