A rewrite of the Inflation Reduction Act will block access to major US subsidies from 2026.
China’s clean energy companies will be excluded from the tax benefits they enjoyed under the Inflation Reduction Act (IRA) if one big beautiful bill law currently being considered in the US Congress becomes law.
The law, a budget settlement package aimed at implementing President Donald Trump’s policy agenda, was passed by the House of Representatives early on Thursday by one vote. China’s Sun Importers are asking the Senate to change courses for versions of the bill.
The IRA, signed into law by President Joe Biden in 2022, is often referred to as the “Green New Deal.” This provided tax amortization to clean energy producers and manufacturers primarily of EV batteries, battery storage, solar and wind power.
For China, the IRA was primarily a solar story.
Since the law, no country has invested more countries than China in US solar projects.
At least seven Chinese solar companies have announced more than $1 billion in total investments in new or existing solar projects in states across the country. Before the IRA was established, only China’s solar power company Jinko Solar, one of the world’s largest solar companies, had its factory in Jacksonville, Florida. However, since 2022, Ohio, Texas, Alabama, New Mexico and Arizona have been added to the mix.
It is unclear what will happen to these Chinese solar investments. At this time, none of them have been declared.
SEIA President Abigail Ross Hopper has never mentioned China, but has called the change to the IRA “deliberately ignorant of the fact that it will deploy solar deployments. This is the only way that the US power grid can meet the demands of American consumers, businesses and innovation.” Hopper later said that without the solar power that China has dominated, the US would face higher electricity rates and “communities across the country will face blackouts.”
What will change solar in China?
Under the new bill, Chinese companies are the dominant US solar forces under the IRA, losing tax credits that made businesses attractive to invest in solar.
Congress had already exempted the so-called “concerns” from the tax benefits of the CHIPS Act and the bipartisan infrastructure bill. Foreigners of concern are companies in China, Russia, North Korea, Iranian, or companies with close ties with these governments through corporate management, board members, and investments. However, except for battery components in electric vehicles from China, Congress did not apply the same rules to the IRA.
House Passed Bill will change everything in China.
If the Senate holds the bill’s language unharmed, Chinese-made solar will no longer qualify for 45-year-old credit from 2026. Chinese solar manufacturers like Zinco in Florida and Longi Green Energy Technology in Ohio will likely not be able to reduce manufacturing costs by 45X rule by 2027.
Once Trump signs the law, China will no longer qualify for what is equivalent to a “double subsidy.” This will lead to the homeland of subsidies and other benefits given to the parent company by Beijing and the state government, in addition to the destruction of taxes from the US.
“The United States stands on a cliff of one-time opportunities for generations to receive energy independence and corresponding benefits for security and economic development that comes with the revival of US production,” the author of the report writes. “These opportunities run the risk of being wasted if short-term trade-offs are made to allow Chinese state-backed players to take advantage of US industrial policy.”
From NTD News
