(Dmytro “Henry” Aleksandrov, Headline USA) It was recently reported that Chinese solar manufacturers started building factories in the United States to reap American subsidies created by the Inflation Reduction Act (IRA), Joe Biden’s signature climate bill.
According to the Wall Street Journal, after the IRA became law in August 2022, Chinese-based companies became responsible for about 25% of the 80 gigawatts of new solar manufacturing capacity in the U.S. In addition to that, robust tax credit programs to incentivize domestic green energy production were established.
These China-based solar companies could potentially reap a combined $1.4 billion worth of value from IRA subsidies each year if the factory construction and expected outputs that were announced by the companies would stay on schedule.
This information just exposed the IRA as a failure, considering that these China-based companies could just capture subsidies for the IRA. LONGi and Trina Solar were among the subsidiaries or partnerships that were used by the Chinese companies to get in on the IRA subsidies.
“We definitely don’t want to miss the wave,” Steven Zhu, the president of Trina’s U.S. operations, said, referring to the subsidies that were made available by the IRA.
A 2023 analysis published by Sheffield Hallam University revealed that the supply chains of both Trina Solar and LONGi are reportedly linked to the forced labor of Uyghur Muslims in China.
The Journal also reported that China dominates the global supply and refining capacity for the raw materials that are needed to mass-manufacture green energy-related products, with approximately 80% of the world’s solar panel production happening in China.
Even though production costs are still higher in the U.S., some of these companies decided that it is still worthwhile to operate in the American market with the help of subsidies.
The news source wrote that several of the companies that are anticipating access to IRA tax credits previously shifted their production to other countries in Asia as American policy and tariffs changed.
The China-based solar companies bringing operations to the U.S. with the IRA marked a reversal in the decades-long trend of American jobs being offshored to China, according to a White House spokesman.