Some US solar manufacturers criticize Biden’s tax credits as too soft on China

Biden administration rules released Friday that will determine which companies and manufacturers can take advantage of new tax credits for the solar industry are being criticized by U.S.-based manufacturers of solar products, who say the guidelines don’t go far enough to try to lure production back 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 to spur the construction of more solar factories in the U.S. and reduce the country’s reliance on China for clean energy commodities needed to mitigate climate change. change.

The Treasury Department, in guidance issued on Friday, said it would offer an additional 10 percent tax credit to facilities that assemble solar panels in the United States, even if they import the silicon wafers used to make those panels from foreign countries. Under the Biden administration’s new climate legislation, 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 were trying to take a balanced approach, one that leaned toward forcing supply chains to return to the United States. But China’s dominance of the global solar industry has created a difficult calculus for the Biden administration, which wants to promote U.S. production of solar products but also ensure an abundant supply of affordable solar panels to reduce carbon emissions.

The officials said the Biden administration would have leeway to change the rules as U.S. supply chains become stronger.

“The domestic content bonus under the Inflation Reduction Act will boost U.S. manufacturing, including in iron and steel, so 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 that all Americans share in the growth of the clean energy economy.”

Critics said the new rules would not go far enough to incentivize companies to move their solar energy supply chain out of China.

Mike Carr, executive director of the Solar Energy Manufacturers for America Coalition, which includes solar companies with U.S. operations such as 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 is likely to result in scaling back planned investments in the critical areas of solar wafer, ingot and polysilicon manufacturing,” he said in a statement. “China produces 97 percent of the world’s solar wafers – giving them significant control over both polysilicon and cell production. We fear this guidance will cement their dominance over these 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 could require more than doubling the annual pace of solar installations.

The US remains dependent on Chinese manufacturers for low-cost solar modules, although many Chinese-owned factories now make these items 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 sunlight. And a significant portion of Chinese polysilicon comes from the Xinjiang region, where the US government has banned imports due to concerns over forced labor.

Other companies in the solar energy supply chain, which rely on imported components, were more positive about the Finance Ministry’s guidance.

Abigail Ross Hopper, executive director of the Solar Energy Industries Association, said the guidance was an important step forward that would “trigger a flood of investment in American-made clean energy equipment and components.”

“The U.S. solar and storage industry strongly supports establishing a domestic clean energy supply chain, and today’s guidance will complement the manufacturing renaissance that began when the historic Inflation Reduction Act passed last summer,” she said.

Congressional Republicans have already targeted the Biden administration’s climate legislation, saying it fails to set tough guidelines against manufacturing in China and that it could transfer federal dollars to Chinese-owned companies that have established themselves in the United States.

The Biden administration is also doling out funds to build up the semiconductor and electric car battery industries. Guidelines for this money include restrictions on access to so-called foreign entities of concern, such as Chinese-owned companies. But the Inflation Reduction Act contains no safeguards against federal dollars going to the US operations of Chinese solar companies.

In an April 25 congressional hearing, Representative Jason Smith, chairman of the House Ways and Means Committee, pointed to the Florida facilities of JinkoSolar, a Chinese-owned manufacturer, as eligible for federal tax credits.

“The work at the plant involves robots placing strings of solar cells – largely sourced from China – on a solar panel base,” said a fact sheet released by Mr Smith.

Mr. Biden has also clashed with domestic solar manufacturers over a separate trade issue that would see tariffs on solar products imported from Chinese companies based in Southeast Asia.

Mr. Biden’s decision to waive the tariffs for two years angered Republicans and some Democrats in Congress, who said American manufacturers deserved 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.