Biden’s Landmark Climate Bill Lures China’s Clean Energy Giants

(Bloomberg) — China’s leading renewables firms are joining the rush to open factories in the US after Washington passed a landmark climate bill that supports local clean energy manufacturing.

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Some of the nation’s top solar panel makers are involved in setting up American plants, while the Chinese company that makes the world’s largest wind turbine, Ming Yang Smart Energy Group Ltd., is exploring whether to establish production and research facilities there.

The building boom underscores how the US has rebuilt its credentials as a cleantech manufacturing hub after last year’s Inflation Reduction Act. This bill, a major achievement by the Biden Administration, includes $374 million in new climate-related expenditures. That’s drawn the attention of China’s world-leading renewables industry despite deepening tensions between the two governments.

“The US is working on low-carbon, green development, has plans, and has introduced many good policies and mechanisms — it is very attractive,” Ming Yang Chairman Zhang Chuanwei said in an interview last week at the Boao Forum for Asia on the island of Hainan, an event dubbed as China’s version of Davos.

The company hasn’t announced any US plans yet, but three of its clean energy peers are in the process of building their presence there: JA Solar Technology Co. in Arizona, Longi Green Energy Technology Co. in Ohio, and Jinko Solar Co. in Florida.

Chinese solar companies dominate global panel production. However, they are prevented from shipping the panels to the US by a series of trade disputes. There have also been allegations of human rights violations that China has denied. Some of these companies have tried to increase exports from plants located in southeast Asia in order to circumvent US trade embargoes.

Biden’s climate policy is designed to boost domestic cleantech industries and reduce America’s reliance on imports. The bill also encourages foreign companies in the US to establish a business. This has led to a wave of factory announcements ever since August. Chinese companies, however, have been reluctant to publicly announce their investments.

That’s due to Washington’s increasingly adversarial approach to Chinese firms, according to Li Junfeng, managing director of the China Energy Research Society, a government-affiliated think tank. He mentioned the scrutiny that battery maker Contemporary Amperex Technology Co. faced over its recent tie up with Ford Motor Co. as well as the controversy over national security concerns surrounding social-media platform TikTok.

That’s left Chinese companies fearing they won’t get the same treatment as their South Korean or European counterparts, Li said.

“It isn’t enough for the US to just introduce the IRA bill. It needs to give a clear expectation that companies will be treated equally,” he said. “If one day it says that solar panels are also national security issues, we won’t be able to talk reasonably anymore.”

Cleantech is assuming a strategic importance as it becomes the world’s biggest source of new energy. China’s advantage means that governments elsewhere are trying to chip away at its dominance by carving out their own supply chains. But Beijing is fighting its corner, albeit in ways that could undercut the industry’s pleas for fair treatment from US authorities.

The Chinese government has launched its own probe of the CATL-Ford deal, to ensure the battery giant’s core technology isn’t handed over to the US carmaker. It’s also considering an export ban that would help maintain its substantial lead in solar manufacturing.

Li stated that the proposed ban on solar energy is a draft and has been opposed by some companies. China has spent over 20 years building the world’s best solar industry, but it needs to balance local manufacturing capabilities with maintaining a robust global supply chain, he said.

Li stated that China is afraid of losing access to key technologies. However, other countries are also scared. One answer is to “encourage Chinese companies to build factories abroad.”

Trade Barriers

Gao Jifan (chairman of Trina Solar Co.), said that trade barriers between countries such as India and the US are driving up the price of clean energy. This was according to a Boao Forum panel. “We should build a mechanism that makes everybody feel safe, instead of building barriers,” he said.

Gao said that clean energy equipment should be produced where it is most affordable and traded worldwide without any restrictions. Trina would also be willing to increase manufacturing capacity in the US and Europe, given the favorable policies, he stated.

Ming Yang’s Zhang said the company could buy parts and equipment from local firms if it does decide to set up in America. And the nation’s infamously hurricane-prone coastal areas will also benefit from deploying its turbines because they’re designed to resist extreme winds.

“The US, like China, is a massive renewable energy market,” he said. “We are willing to enter the US, and we hope that the US will create a fair, inclusive, and predictable environment.”

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