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.
“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.
If passed by the Senate, 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.”
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.
US hostility toward energy-transition policies has already sent a chill through European investing circles, where such strategies are a major driver of flows. Amundi SA, Europe’s largest asset manager, said last month it was seeing evidence that clients had “massively repositioned” to avoid the US market, amid concerns over everything from a lack of stewardship to a degradation of key climate policies. UBS Group AG also said it was aware of sizeable flows out of US equity exchange-traded funds.
Tyler Christie, who previously invested in climate and the energy transition at BlackRock Inc. as part of its Decarbonization Partners venture with Temasek Holdings Pte, said the concern now is that “extreme volatility in US policy is creating uncertainty that’s rippling through the financial system.” At the same time, “European policy is arguably more aligned and predictable than ever” as it tackles “existential challenges around energy, security and resources.”
The upshot is that asset managers, both in Europe and the US, “are starting to direct more capital into European projects where they can see policy is more consistent and reinforced by fundamental demand,” he said.
The “sledgehammer” that House Republicans have taken to the IRA “is just one more example of the new volatility and uncertainty in US policy,” Christie said.