US solar producers criticize Biden’s tax cuts as too lax for China

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Biden administration rules released Friday that will determine which companies and manufacturers can take advantage of new tax credits for the solar industry have been criticized by US-based solar product makers, who say the guidelines don’t go far enough to try to limit the luring production back from China .

The rules stem from President Biden’s sweeping clean energy bill, which offers a mix of tax cuts and other incentives to encourage the construction of more solar plants in the United States and reduce the country’s dependence on China for clean energy goods that needed to mitigate climate change.

The Treasury Department said in a guidance released Friday that it would provide 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 abroad. Under the Biden administration’s new climate legislation, solar and wind farms can apply for a 30 percent tax credit on the cost of their facilities.

Senior government officials told reporters Thursday they were trying to take a balanced approach, one that tended to force supply chains to return to the United States. But China’s dominance of the global solar industry has created a tricky calculation for the Biden administration, which wants to promote US production of solar products but also ensure an abundant supply of low-cost solar panels to reduce carbon emissions.

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

“The domestic content bonus under the Inflation Reduction Act will boost U.S. manufacturing, including in iron and steel, so that U.S. workers and businesses continue to benefit from President Biden’s Investing in America agenda,” Treasury Secretary Janet L. Yellen said in a statement. a statement. “These tax cuts are essential to boost investment and ensure that all Americans share in the growth of the clean energy economy.”

Critics said the new rules wouldn’t go far enough to give companies incentives to move the solar power supply chain out of China.

Mike Carr, the 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 supply chain for to build solar energy production.”

“The simple fact is that today’s announcement is likely to result in the scaling back of 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 substantial control over both polysilicon and cell production. We fear that this guidance will solidify their dominance over these critical parts of the solar energy supply chain.”

The Biden administration has set an ambitious goal of generating 100 percent of the country’s electricity from carbon-free energy sources by 2035, a goal that may require more than doubling the annual rate of solar installations.

The United States still relies heavily on Chinese manufacturers for low-cost solar modules, although many Chinese factories now make these 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 sunlight. And a significant portion of China’s polysilicon comes from the Xinjiang region, where the US government has banned imports over concerns about forced labor.

Other companies in the solar energy supply chain, which rely on imported components, were more positive about the guidance from the Treasury Department.

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

“The U.S. solar and storage industry is strongly in favor of bringing a domestic clean energy supply chain ashore, and today’s guidelines will complement the manufacturing renaissance that began when the historic Inflation Reduction Act passed. summer took effect,” she said.

Congressional Republicans have already taken aim at the Biden administration’s climate legislation, saying it is failing to create tough guidelines against manufacturing in China and may be funneling federal dollars to Chinese companies based in the United States.

The Biden administration is also providing funding to build the electric vehicle semiconductor and battery industries. Guidelines for that money include restrictions on access to so-called foreign entities of interest, such as Chinese-owned companies. But the Inflation Reduction Act contains no 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 out that the Florida facilities of JinkoSolar, a Chinese-owned manufacturer, are eligible for federal tax credits.

“In factory work, robots place arrays of solar cells – largely sourced from China – on a solar panel base,” according to a fact sheet from Mr Smith.

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 in Southeast Asia.

Biden’s decision to waive the tariffs for two years 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 overturn the president’s decision, which Biden is expected to veto.

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