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The Biden administration’s rules released on Friday that will determine which companies and manufacturers can benefit from a new solar industry tax credit have been criticized by US-based solar product manufacturers, who say the guidelines don’t go far enough in an attempt to lure manufacturing back from China. .
The rule comes from President Biden’s clean energy bill, which offers a mix of tax credits and other incentives to try and encourage the construction of more solar plants in the United States and reduce the country’s dependence on China for clean energy goods needed to mitigate climate change. change.
The Department of Finance, in guidance issued on Friday, said it will offer an additional 10 percent tax credit for facilities assembling solar panels in the United States, even if they import silicon wafers used to make panels from foreign countries. Under the Biden administration’s new climate law, solar and wind farms can claim a 30 percent tax credit for the cost of the facility.
Senior administration officials told reporters on Thursday that they are trying to take a balanced approach, which tends to force supply chains back to the United States. But China’s dominance of the global solar industry makes calculus difficult for the Biden administration, which wants to promote US solar product manufacturing but also ensure a supply of low-cost solar panels to reduce carbon emissions.
The official said the Biden administration will have an opportunity to change the rules as America’s supply chain strengthens.
“The domestic content bonus under the Inflation Reduction Act will boost American manufacturing, including in iron and steel, so that American workers and companies 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 all Americans can grow a clean energy economy.”
Critics say the new rules won’t be enough to incentivize companies to move their solar supply chain out of China.
Mike Carr, executive director of the Solar Manufacturers Coalition for America, which includes solar companies with US operations like Hemlock Semiconductor, Wacker Chemie, Qcells and First Solar, called the move “a missed opportunity to build a domestic solar manufacturing supply chain.”
“The simple fact is that today’s announcement will likely lead to the scaling back of planned investments in the critical areas of solar wafers, ingots, and polysilicon production,” he said in a statement. “China produces 97 percent of the world’s solar wafers – giving it substantial control over the production of polysilicon and cells. We fear that this guidance will strengthen its dominance in this critical part 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 would require more than doubling solar installations.
The United States is still heavily dependent on Chinese manufacturing for low-cost solar modules, although many Chinese-owned factories now make the goods in Vietnam, Malaysia and Thailand.
China also supplies many of the key components in solar panels, including more than 80 percent of the world’s polysilicon, which most solar panels use to absorb energy from the sun. And a significant portion of Chinese polysilicon comes from the Xinjiang region, where the US government has banned imports due to concerns about forced labor.
Other companies in the solar supply chain, which rely on imported components, are more positive about the Treasury Department’s guidance.
Abigail Ross Hopper, chief executive of the Solar Energy Industries Association, said the guidance is an important step that will “spark a flood of investment in American-made clean energy equipment and components.”
“The U.S. solar and storage industry strongly supports the onshoring of the domestic clean energy supply chain, and today’s guidance will enhance the Manufacturing Renaissance that began when the historic Inflation Reduction Act was passed last summer,” she said.
Congressional Republicans have targeted the Biden administration’s climate legislation, saying it fails to establish tough guidelines on manufacturing in China and could push federal dollars toward Chinese companies already established in the United States.
The Biden administration also provided funding to build the semiconductor battery and electric vehicle industries. The guidelines for the money include restrictions on access to foreign entities it calls concerns, like Chinese-owned companies. But the Inflation Reduction Act does not contain guardrails against federal dollars going to the US operations of Chinese solar companies.
At a congressional hearing on April 25, Representative Jason Smith, chairman of the House Ways and Means Committee, pointed to JinkoSolar’s Florida facility, a Chinese manufacturer, as eligible for federal tax credits.
“Work at the factory includes robots placing strings of solar cells – most of which come from China – onto the base of the solar panels,” a fact sheet released by Mr Smith said.
Mr Biden has also clashed with domestic solar manufacturers over 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 tariffs for two years has angered Republicans and some Democrats in Congress, who say US-based manufacturers need more protection. In recent weeks, the House and Senate have approved measures to reverse the president’s decision, which Mr. Biden is expected to veto.
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