Chinese Solar Firms Ready to Capitalize on Biden’s Climate Bill
TL/DR –
Chinese solar manufacturers are building factories in the U.S. to take advantage of subsidies provided by the Inflation Reduction Act (IRA), President Biden’s climate law. Roughly 25% of the 80 gigawatts of new solar manufacturing capacity announced in the U.S. since the IRA’s enactment comes from China-based companies; they could earn a combined $1.4 billion annually from these subsidies. This situation appears to contradict the IRA’s aim to develop a U.S. green energy supply chain, with companies such as LONGi and Trina Solar, which are linked to forced labor in China, benefitting from the subsidies.
Chinese Solar Manufacturers Leverage US Subsidies for Green Energy Production
Chinese solar manufacturers are leveraging American subsidies through the Inflation Reduction Act (IRA), President Biden’s climate bill, to build factories in the U.S. These companies make up about 25% of the 80gigawatts of new solar manufacturing capacity announced since the IRA’s introduction in August 2022, according to The Wall Street Journal.
If factory construction and expected outputs stay on track, these China-based solar companies could collectively gain $1.4 billion yearly from IRA subsidies. Companies such as LONGi and Trina Solar, who have been linked to the forced labor of Uyghur Muslims in China, are using subsidiaries or partnerships to access these IRA subsidies.
This trend contradicts the IRA’s goal of strengthening domestic green energy supply chains. China currently dominates the global supply and refining capacity for raw materials needed to manufacture green energy products. Even with higher production costs in the U.S., IRA subsidies make it profitable for some Chinese companies to establish operations in the American market.
Several companies have shifted their production to other Asian countries in response to changing American policies and tariffs. Despite this, a White House spokesman claimed that the China-based solar companies establishing operations in the U.S. marks a reversal in the trend of American jobs being offshored to China.
Chinese companies such as Gotion, Inc., a subsidiary of the China-based electric vehicle battery manufacturer Gotion High-Tech, are also set to benefit from IRA subsidies. Despite opposition from locals and lawmakers stemming from Gotion High-Tech’s extensive ties to the Chinese Communist Party, the company plans to build major subsidized facilities in Illinois and Michigan. The White House did not immediately respond to requests for comment.
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