U.S. Treasury Rules Should Prioritize Domestic Manufacturing
WASHINGTON — The Coalition for a Prosperous America (CPA) today released a statement urging the Biden administration to issue rules on the domestic content bonus that will incentivize the full reshoring of the domestic solar supply chain. In the coming weeks, the U.S. Treasury Department will issue guidance on what types of solar equipment satisfy the Inflation Reduction Act’s (IRA) domestic content bonus for solar projects.
The IRA provides a tax credit to solar project developers, including a 10% domestic content bonus if solar project developers use a minimum level of U.S.-manufactured solar equipment in their projects. CPA strongly supported the provision in the IRA that reduces our reliance on China by providing tax credits for the domestic solar manufacturing supply chain, including modules, photovoltaic cells, and solar-grade polysilicon. As a result of these tax credits, domestic solar manufacturers have already announced significant investment in the U.S. to boost domestic production of solar cells, wafers, and polysilicon.
A new poll conducted by Morning Consult on behalf of CPA found that an overwhelming majority of likely voters (75%) support requiring the core components that make up solar panels to be manufactured in the United States to satisfy the IRA’s 10% domestic content bonus available to solar project developers that use a minimum level of U.S.-manufactured solar equipment in their projects. Only 8% of likely voters are opposed.
Treasury’s guidance on this matter will be crucial in determining whether the full strategic solar supply chain is successfully reshored to the U.S. Chinese solar manufacturers and their allies have argued that the domestic content bonus standard should require only the assembly of solar panels to take place in the United States and that the core components of the panels can be manufactured in China or Chinese-controlled factories in foreign countries. U.S. domestic solar manufacturers have argued that the domestic content bonus standard should require both the assembly of solar panels to take place in the United States and the core components of the panels to be manufactured domestically.
The legislative intent of the Inflation Reduction Act was clearly to incentivize U.S. manufacturing of the full strategic solar supply chain, including solar modules, cells, wafers and polysilicon. Issuing rules that allowed assembly—not manufacturing—to qualify for the domestic content bonus would significantly undermine the Biden administration’s stated goal of creating investment in and reshoring the full strategic solar supply chain, including photovoltaic cells, modules, and solar-grade polysilicon.
“The Biden administration and Treasury should ignore the lobbying of predatory Chinese solar manufacturers and their allies who are advocating for a meaningless standard that merely assembling solar equipment in the U.S. is enough to satisfy a Made in America requirement,” said Michael Stumo, CEO of CPA. “Instead, Treasury should adopt a standard that fulfills the legislative intent of the Inflation Reduction Act and that will ensure that the full strategic solar supply chain is reshored to the U.S. The Inflation Reduction Act was a powerful industrial policy bill that is already starting to reduce China’s dominance of the global solar chain. However, it is critical that the Biden administration and Treasury use this opportunity to issue rules on the domestic content bonus that incentivizes the full reshoring of the production of the solar supply chain—not just mere assembly of Chinese made solar equipment.”