The Biden administration’s rules released Friday that will determine which companies and manufacturers will benefit from new tax credits in the solar industry have been criticized by US-based solar product makers, who says the guidelines don’t go far enough to try to lure manufacturing away from China. .
The rules stem from President Biden’s sweeping clean energy bill, which offers a mix of tax credits and other incentives to try and encourage the construction of more solar factories in the United States and reduce dependence. in the country of China for the clean energy tools needed to mitigate the climate. change.
The Treasury Department, in guidance released Friday, said it would provide a 10 percent additional tax credit for facilities that assemble solar panels in the United States, even if they import them. the silicon wafers used to make the panels come from foreign countries. Under the Biden administration’s new climate law, solar and wind farms can apply for a 30 percent tax credit on the costs of their facilities.
Senior administration officials told reporters Thursday that they are trying to take a balanced approach, one that relies on forcing supply chains to return to the United States. But China’s dominance of the global solar industry has created a difficult calculation for the Biden administration, which wants to promote U.S. manufacturing of solar products but also ensure a large supply of cheap solar panels to reduce carbon emissions.
Officials say the Biden administration has the authority to change the rules if American supply chains become more robust.
“The domestic content bonus under the Inflation Reduction Act will boost American manufacturing, including iron and steel, so American workers and companies will continue to benefit from President Biden’s Investing in America agenda,” Treasury Secretary Janet L. Yellen said in a statement. “These tax credits are key to driving investment and ensuring that all Americans share in the growth of the clean energy economy.”
Critics say the new rules aren’t enough to provide incentives for companies to shift the solar supply chain away from China.
Mike Carr, the executive director of the Solar Energy Manufacturers for America Coalition, which includes solar companies with US operations such as Hemlock Semiconductor, Wacker Chemie, Qcells and First Solar, called the move “a lost opportunity to build a domestic solar manufacturing supply chain.”
“The simple fact is that today’s announcement is likely to result in scaling back the planned investments in the critical areas of solar wafer, ingot, and polysilicon production,” he said in a statement. “China produces 97 percent of the world’s solar wafers — giving them significant control over polysilicon and cell production. We fear this guidance will strengthen their dominance in critical parts of the solar supply chain. “
The Biden administration has set an ambitious goal of generating 100 percent of the nation’s electricity from carbon-free energy sources by 2035, a goal that may require more than doubling the annual pace of increases. install solar.
The United States still relies heavily on Chinese manufacturers for cheap solar modules, although many Chinese-owned factories now make these items in Vietnam, Malaysia and Thailand.
China also supplies many key components of solar panels, including more than 80 percent of the world’s polysilicon, which is used in most solar panels to absorb energy from sunlight. And a significant portion of China’s polysilicon comes from the Xinjiang region, where the U.S. government has banned imports over forced labor concerns.
Other companies in the solar supply chain, which rely on imported components, were more positive about the Treasury Department’s guidance.
Abigail Ross Hopper, the chief executive of the Solar Energy Industries Association, said the guidance is an important step forward that will “trigger a flood of investment in American-made clean energy equipment and components.”
“The US solar and storage industry strongly supports the onshoring of a domestic clean energy supply chain, and today’s guidance will add to the manufacturing renaissance that began when the historic Inflation Reduction Act was passed last summer,” he said.
Congressional Republicans have already targeted the Biden administration’s climate law, saying it fails to set tough guidelines against Chinese manufacturing and that it could funnel federal dollars to companies that owned by the Chinese who founded the United States.
The Biden administration also provided funding to build the semiconductor and electric vehicle industries. The guidelines for that currency include limits on access to so-called foreign entities of concern, such as Chinese-owned companies. But the Inflation Reduction Act does not contain guardrails against federal dollars going to the US operations of Chinese solar companies.
In a congressional hearing on April 25, Representative Jason Smith, chairman of the House Ways and Means Committee, pointed out that JinkoSolar’s Florida facilities, a Chinese-owned factory, are eligible for tax credits. in federal.
“Work at the plant involves robots placing strings of solar cells – most of which come from China – onto the solar panel base,” a fact sheet released by Mr. Smith said.
Mr. Biden is also fighting domestic solar manufacturers in a separate trade case that would see tariffs imposed on solar products imported from Chinese companies based in Southeast Asia.
Mr. Biden’s decision to waive the tariffs for two years has angered Republicans and some Democrats in Congress, who say US-based manufacturers deserve more protection. In recent weeks, the House and Senate have approved a measure to reverse the president’s decision, which Mr. Biden is expected to veto.