The Biden administration’s rules released Friday that will determine which companies and manufacturers can take advantage of new tax credits for the solar industry are coming under fire from US-based manufacturers of solar products.
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 United States and reduce the country’s dependence on China for solar energy. clean energy assets needed to mitigate climate change. change.
The Treasury Department, in guidance issued Friday, said it would offer an additional 10 percent tax credit for 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 claim a 30 percent tax credit on their facility costs.
Senior administration officials told reporters Thursday they were trying to take a balanced approach, one that leans toward forcing supply chains back into the United States. But China’s dominance of the global solar industry has created a complicated calculation for the Biden administrationwho wants to promote the manufacturing of solar products in the US but also to ensure an abundant supply of low-cost solar panels to reduce carbon emissions.
Officials said the Biden administration would have leeway to change the rules when American supply chains strengthened.
“The domestic content bonus under the Cut Inflation Act will boost American manufacturing, including in iron and steel, so that American workers and businesses continue to benefit from President Biden’s Invest in America agenda,” he said. Treasury Secretary Janet L. Yellen in a statement. “These tax credits are key to boosting investment and ensuring that all Americans participate in the growth of the clean energy economy.”
Critics said the new rules will not go far enough to give companies incentives to move the solar supply chain out of China.
Mike Carr, 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 missed opportunity to build a supply chain of national solar manufacturing. ”
“The simple fact is that today’s announcement will likely result in the reduction of planned investments in the critical areas of solar wafer, ingot and polysilicon production,” it said in a statement. “China is producing 97 percent of the world’s solar wafers, giving them substantial control over polysilicon and cell production. We fear this guidance will cement your dominance over these critical pieces 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 twice the annual rate of solar installations.
The United States still relies heavily on Chinese manufacturers for low-cost solar modules, although many Chinese-owned factories It now manufactures these products in Vietnam, Malaysia, and Thailand.
China also supplies many of the key components of 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 China’s 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, were more positive about the Treasury Department’s guidance.
Abigail Ross Hopper, executive director of the Solar Energy Industries Association, said the guidance was an important step forward that “would spark a flood of investment in clean energy equipment and components made in the United States.”
“The US solar and storage industry strongly supports the addition of a clean home energy supply chain, and today’s guidance will complement the manufacturing renaissance that began when the landmark Inflation Reduction Act was passed. last summer,” he said.
Congressional Republicans have already targeted the Biden administration’s climate legislation, saying it does not set strict guidelines against manufacturing in China and can funnel federal dollars to Chinese-owned companies that have established themselves in the United States.
The Biden administration is also providing funding to develop the semiconductor and electric vehicle battery industries. The guidelines for that money include limits on access to so-called foreign entities of interest, such as Chinese-owned companies. But the Inflation Reduction Act contains no protection against federal dollars going to the US operations of Chinese solar companies.
At a congressional hearing on April 25, Rep. Jason Smith, chairman of the House Ways and Means Committee, noted that the Florida facilities of JinkoSolar, a Chinese-owned manufacturer, are eligible for federal tax credits.
“Work at the plant involves robots placing strings of solar cells, mostly from China, onto a solar panel base,” said a fact sheet published by Mr Smith.
Mr. Biden has also clashed with domestic solar power manufacturers over a separate trade case that would impose tariffs on imported solar products from Chinese companies based in Southeast Asia.
Mr. Biden’s decision to two-year duty waiver it angered Republicans and some Democrats in Congress, who said US-based manufacturers deserved more protection. In recent weeks, the House and Senate approved a measure to reverse the president’s decision, which Biden is expected to veto.