Congressmen John Moolenaar and Jared Golden introduced a new bill that aims to halt advanced manufacturing tax credits.
Congressmen John Moolenaar (R-MI) and Jared Golden (D-ME) introduced bipartisan legislation to block the implementation of the recently finalized U.S. Treasury rule on section 45X advanced manufacturing production tax credit.
The Inflation Reduction Act, passed in 2022, offers manufacturing 45X tax credits for solar components made in America. While the lucrative tax credits have been attracting clean energy manufacturers worldwide to build factories in the U.S., the fact that some of the new manufacturing facilities are from Chinese companies has created a controversy among legislators on how to onshore the solar supply chain.
The two legislators oppose implementation of the 45X rule, as currently written, as they believe it would allow Chinese-owned companies to receive American tax dollars for producing battery components.
“America must be a nation of producers, not just consumers,” said Golden. “That’s the goal of domestic manufacturing credits: to support America’s production economy. But the Biden administration has consistently included loopholes in rulemaking that allow foreign-owned companies — including those with ties to adversarial foreign governments — to benefit from preferential tax treatment intended for American firms. The administration needs to go back to the drawing board and ensure they are not subsidizing our global competitors.”
Moolenaar previously introduced the “No Gotion Act”, which stands for No Official Giveaways of Taxpayers’ Income to Oppressive Nations. aimed to prevent companies based in China, Russia, Iran, or North Korea, and the subsidiaries of those companies, from qualifying for tax credits including 45X. The difference between the No Gotion bill and the latest bill is that No Gotion restricts tax credits extended to companies from the above-mentioned countries, while the latest bill halts 45X altogether.
Gotion, a California-headquartered battery manufacturer, is a subsidiary of Gotion Hight Tech, which is headquartered in Hefei, China and is about 25% owned by Volkswagen. Gotion plans to build a $2.4 billion electric vehicle battery plant near Big Rapids, Michigan.
The U.S. has experienced incredible growth in domestic manufacturing and clean energy production since passage of the IRA, and with that growth comes high demand on the supply chain and onshoring that supply chain. Solar Energy Manufacturers of America (SEMA) Coalition executive director Michael Carr, said in a statement to pv magazine USA that passage of this bill would create uncertainty for solar manufacturers and their employees:
American solar manufacturers have invested billions of dollars to reduce our reliance on China, lower energy costs, and create thousands of manufacturing jobs across the solar supply chain. We appreciate the aim of Rep. Moolenaar and Rep. Golden’s resolution, but the Congressional Review Act’s blunt force effect would create significant uncertainty for American solar manufacturers and the workers they employ. The 45X incentives are critical in furthering America’s energy, economic, and national security goals, and we look forward to working with Congress and the next administration to ensure the provision is implemented in a manner that supports U.S. taxpayer interests and continues our incredible progress bringing solar manufacturing back to the United States.
If Moolenaar and Golden’s legislation is passed by the House of Representatives, the Senate, and signed by the President within 60 legislative days of the section 45X rule being released by the executive branch, the rule would be ended.
The text of Moolenaar and Golden’s resolution can be found here.
