Biden’s landmark climate bill lures China’s clean energy giants

WASHINGTON – China’s leading renewables firms are joining the rush to open factories in the United States after Washington passed a landmark climate bill that supports local clean energy manufacturing.

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, 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. The bill, a signature achievement for the Biden administration, includes US$374 billion (S$497 billion) in new climate-related spending. That has 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 has not 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 firms dominate global panel production, but have been stymied from shipping to the US because of a series of trade disputes and allegations of human rights abuses, which China has denied. Some of the firms have moved to expand exports from plants in South-east Asia to navigate curbs on US trade.

Mr Biden’s climate policy is designed to boost domestic cleantech industries and reduce America’s reliance on imports. The bill extends to encouraging foreign firms to set up shop in the US, sparking a wave of new factory announcements since it was passed in August. But Chinese companies have been reticent about publicising their investments.

That is 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 cited the scrutiny faced by battery maker Contemporary Amperex Technology Co. over its recent tie-up with Ford Motor Co., as well as the furore linked to national security concerns that has erupted over social-media platform TikTok.

That has left Chinese companies fearing they will not get the same treatment as their South Korean or European counterparts, Mr 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 is not handed over to the US carmaker. It is also considering an export ban that would help maintain its substantial lead in solar manufacturing.

Mr Li said the proposed solar ban is only a draft, and has met objections from 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.

China is scared of being cut off from key technologies, but other countries have the same fear, he said. One answer is to “encourage Chinese companies to build factories abroad”.

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