Biden, Congress must address China’s efforts to undermine the Inflation Reduction Act

The Inflation Reduction Act has spurred historic investments in America’s renewable energy sector. However, the Chinese Communist Party could put these investments at risk with its coordinated efforts to undermine America’s energy independence and exert control over our energy future.

As countries increasingly deploy renewable energy, Beijing and Washington recognize that solar power is a critical piece of the renewable puzzle — for two very different reasons.

The Biden administration is driven by concerns about climate change and creating a legacy for the president’s green energy agenda. Meanwhile, the Chinese Communists are strategically pursuing a global monopoly of the solar supply chain. And due to massive Chinese-government subsidies and weak U.S. trade policies, China now controls 72 percent of solar grade polysilicon and 99 percent of solar wafer supply chains.

It’s time to acknowledge the three-dimensional chess game that China has been playing.

The Biden Administration deliberately and mistakenly assumed that Chinese imports were necessary to meet U.S. climate goals. This led to the administration suspending tariffs for two years on Chinese products found to be illegally routed through other countries in Southeast Asia. China has leveraged this opportunity to dump vast amounts of below-cost solar panels in the U.S. market. Solar panel prices have consequently plummeted to levels where it is unprofitable to make them. This risks a shuttering of American production and potential bankruptcies.

Congress included tax credits and other incentives in the Inflation Reduction Act for domestic investment and deployment of a robust U.S. renewable energy market. However, Congress failed to explicitly prohibit Chinese companies from being eligible for these tax credits. As a result, China is currently constructing multiple solar manufacturing facilities in the U.S., paid for in part by American taxpayers on the hook for as much as $125 billion in Inflation Reduction Act tax credits.

China is now looking to get ahead through dumped imports, accessing Inflation Reduction Act credits, and — when non-Chinese manufacturers exit the market — snapping up solar investments in the U.S. at bargain prices. Overseas, we have seen this strategy play out in Chinese solar exports to Europe, followed by bankruptcies and layoffs at non-Chinese manufacturers.

Without a course correction, U.S. taxpayers risk financing a similar Chinese solar expansion and takeover here at home.

The U.S. must respond quickly and forcefully through tough, bipartisan action to combat China’s illegal trade activity. It must protect U.S. taxpayers, and support a domestic solar manufacturing base that creates tens of thousands of good-paying American jobs. 

Securing America’s renewable energy future must be a bipartisan endeavor.

For Democrats, this means onshoring and friend-shoring the solar supply chain to combat climate change. It means not putting climate goals above national security and clean energy independence. It means supporting penalties when China breaks our trade laws. And it means closing the loophole that gives Chinese companies eligibility for Inflation Reduction Act tax credits.

For Republicans, it means seeing energy security as a key component of national security. It means recognizing and blocking Chinese efforts to corner the global market. And it means accepting solar as part of the GOP’s all-of-the-above energy strategy.

We are calling on Congress to address these issues in four critical ways. First, the Administration can use trade tools such as 201 and 301 tariffs to address unfair Chinese trade practices and enforce violations of trade policies. As a result of dumping, the massive oversupply of Chinese imports into the U.S. has driven down panel prices to a point where U.S. manufacturers are unable to compete. The glut of Chinese panels will disrupt efforts to build a thriving U.S. solar market if the Biden administration’s trade policy continues to ignore China’s trade abuses.

Members of Congress should let the administration know how market conditions are affecting solar manufacturing in their districts — and urge the administration to reconsider the Chinese tariff holiday.

Second, foreign adversaries should be prohibited from collecting U.S. taxpayer-funded incentives created by legislation such as the Protect American Advanced Manufacturing Act and the NO GOTION Act. Domestic content requirements should be ramped up so that companies investing in America can provide non-Chinese elements of the supply chain.

Third, Congress should urge the Biden administration to implement these rules in a way that does not ignore China’s near-monopoly on renewable energy supply chains. If America is serious about reducing reliance on China, we must create an environment where manufacturers have certainty that efforts to onshore significant parts of the supply chain are factored into what is counted as “domestic.”

Finally, we cannot truly address climate change if we are dependent on Chinese companies to do it. In our lifetime, we have learned from our reliance on Russian gas and Middle Eastern oil. Now, we cannot let America’s energy future be dependent on Chinese solar panels.

These are realistic steps that can be taken in a bipartisan manner to counter China’s efforts to undermine the Inflation Reduction Act. Failing to do so jeopardizes America’s manufacturing, energy, and solar goals.

Peter DeFazio (D) represented Oregon’s 4th Congressional District from 1987 to 2023. Cory Gardner (R) represented Colorado in the U.S. Senate from 2015 to 2021.