Chinese Solar Manufacturers Reaping American Subsidies

Introduction

Chinese solar manufacturers are taking advantage of American subsidies created by President Joe Biden’s Inflation Reduction Act (IRA) to build factories in the U.S., as reported by The Wall Street Journal. This article explores how these companies are benefiting from the IRA and the implications for the domestic green energy supply chain.

Chinese Solar Manufacturers and IRA Subsidies

Since the IRA became law in August 2022, approximately 25% of the 80 gigawatts in new solar manufacturing capacity announced in the U.S. is being built by Chinese companies. These companies are taking advantage of robust tax credit programs established by the IRA to incentivize domestic green energy production. If construction and expected outputs stay on schedule, these China-based solar companies could receive a combined $1.4 billion worth of value from IRA subsidies annually.

Contradicting Goals of the IRA

Surprisingly, the Chinese companies benefiting from IRA subsidies contradict one of the key goals of the IRA itself. The IRA was intended to develop a domestic green energy supply chain, but instead, China-based companies like LONGi and Trina Solar are using subsidiaries or partnerships to access the subsidies. This situation raises concerns about the effectiveness of the IRA in achieving its objectives.

Environmental and Labor Concerns

Not only are Chinese companies reaping the benefits of IRA subsidies, but their supply chains are reportedly linked to forced labor of Uyghur Muslims in China. A 2023 analysis by Sheffield Hallam University highlights the labor practices associated with companies like Trina Solar and LONGi. This raises ethical and environmental concerns regarding the sustainability of the global green energy industry.

China’s Dominance in the Green Energy Market

China dominates the global supply and refining capacity for raw materials necessary for mass-manufacturing green energy-related products. Approximately 80% of the world’s solar panel production happens within China’s borders. Despite higher production costs in the U.S., some Chinese companies find it worthwhile to establish operations in the American market with the help of subsidies.

Reversal of Offshoring Trend

Several companies anticipating access to IRA tax credits have previously shifted their production to other Asian countries due to changes in American policy and tariffs. However, the arrival of China-based solar companies in the U.S. with the help of the IRA marks a reversal of the trend of offshoring American jobs to China. This development has implications for the domestic job market and the overall economic relationship between the two countries.

Expanding Subsidies Beyond Solar Manufacturing

It’s not just solar manufacturing that Chinese companies are eyeing for IRA subsidies. Gotion, Inc., a subsidiary of the China-based electric vehicle (EV) battery manufacturer Gotion High-Tech, is set to establish subsidized facilities in Illinois and Michigan. However, this move has faced opposition from locals and lawmakers due to concerns about Gotion High-Tech’s extensive ties to the Chinese Communist Party.

Conclusion

The potential for Chinese companies to benefit from IRA subsidies raises questions about the effectiveness of the legislation in achieving its goals. The involvement of Chinese companies in the American green energy market has both economic and ethical implications. As the situation evolves, it remains to be seen how the IRA and similar policies will shape the future of the domestic green energy supply chain.

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Read More of this Story at dailycaller.com – 2024-02-06 16:29:00

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