As part of the Inflation Control Act, the federal government plans to subsidize green energy efforts, such as building new solar panel factories around the country. But some of that money is likely to end up in the hands of foreign solar companies, particularly Chinese companies. Some in the United States dispute this.
Fred Dvorak covers the energy transition and climate for the Wall Street Journal. She spoke with “Marketplace” host Amy Scott about Chinese companies receiving subsidies to set up factories in the U.S. and what that means for the domestic solar industry. did.
Amy Scott: China has long dominated the solar panel business, but it is starting to build factories here in the United States. Why?
Fred Dvorak: There are carrot reasons and stick reasons. Therefore, the biggest reason may be the tariffs and anti-dumping policies that the US has imposed on Chinese solar panels for many years. The reason for the carrot is that it is becoming increasingly difficult for companies that primarily manufacture in China to export their panels to the US. This means that they are responding to both.
Scott: Now, the IRA funds were actually intended to establish a domestic solar panel industry, right? Does this matter if some of the beneficiaries are not American companies?
Dvorak: Looking at the solar industry, much of the technology was developed in the United States, but most of the manufacturing takes place outside of the United States. Therefore, it will not be possible to ramp up domestic solar manufacturing in the United States without assistance from non-US companies. Especially when we're talking about China, it can be very good for the local economy and jobs. Companies come to the United States and manufacture here. It doesn't really matter whether it's a Chinese company or not. But there are other objections people have raised, especially against Chinese companies.
Scott: What are some of those objections? I mean, given that the U.S. has been imposing tariffs on these same companies for a long time.
Dvorak: Well, one thing is, if you have a company that's already dominant and already strong, and controls a large part of the manufacturing industry, and you give them a subsidy to help them set up a new location, that gives them that advantage. This means that it only strengthens the Another example is the rise in geopolitical tensions, especially between China and the United States. It could pose a threat to energy security and national security.
Scott: And how will the US government react to this?
Dvorak: Well, on the national security side, they say the government has a way to look at all foreign investments to see if they pose a national security threat.it is [Committee on Foreign Investment in the United States] It focuses on those investments. And on the other hand, they say investing in manufacturing, which brings clean energy and gives us the ability to build clean energy in America, is a good thing.
Scott: You're talking about the energy transition, and clearly we need more solar panels. How much closer will these IRA grants bring the recipients, whether Chinese or American companies, closer to their goals?
Dvorak: This subsidy is critical to bridging the difference between the cost of building something, whether it's solar panels or wind turbines, in the U.S. and overseas. So if you want a domestic industry, IRA subsidies are critical to help companies make the financial decision to come and locate here.
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