U.S. Solar Manufacturers Would Get Tax Credit in Ossoff Bill

Source: By Mackenzie Hawkins, Bloomberg • Posted: Tuesday, June 22, 2021

Senator Jon Ossoff is poised to introduce legislation establishing a tax credit for domestic solar manufacturers that he hopes will pass as part of a larger infrastructure package later this year.

The tax credit, which would work in concert with existing incentives for consumers, would be fully refundable and aims to rapidly accelerate the production of solar energy in the United States. The Georgia Democrat said his bill is intended to close the gap between U.S. manufacturers and global competitors, paving the way for U.S. leadership on clean energy.

“We should not be satisfied that China has a stranglehold on the solar supply chain and they have been heavily subsidizing domestic production for about a decade and a half without any substantial response from the United States,” Ossoff said in an interview Monday with Bloomberg News.

President Joe Biden is aiming to fully decarbonize the country’s power grids by 2035 — a lofty goal that will require a lot of solar power. But the country has mostly been reliant on imports, including from Chinese companies, for its mounting solar capacity.

Ossoff’s Solar Energy Manufacturing for America Act aims to spur domestic manufacturing by offering tax credits for multiple stages of the solar supply chain, including modules, photovoltaic cells and solar-grade polysilicon. The incentive would be available through 2028 with a phasedown over the next two years.

The Georgia Democrat said he worked with the U.S. Energy Department and companies on the proposed incentive, which he described as important to boost energy independence. The credit, he added, would make price per unit production in the U.S. competitive with foreign manufacturers.

The tax break would be a boon to solar manufacturing in his state, which is a budding hub for clean-energy production. Georgia is home to Hanwha Q Cells’ solar-manufacturing plant that opened during Donald Trump’s presidency. It’s also expected to house an SK Innovation Co. battery plant.

“After a decade of witnessing the systematic erosion of America’s leadership in solar innovation and manufacturing, and the corresponding over-reliance on imports from China, the Solar Energy Manufacturing for America Act represents a new hope for American solar,” Samantha Sloan, vice president of global policy at U.S. manufacturer First Solar Inc., said in an emailed statement.

Ossoff said he’s working with Senate Finance Committee Chairman Ron Wyden to wrap his proposal into a broader clean energy plan that the Oregon Democrat hopes to attach to an infrastructure bill this year. Ossoff said he has also consulted with the White House and Energy Department.

Biden has made renewable energy a focal point of his $2.25 trillion American Jobs Plan, which includes a 10-year extension of tax credits for solar, wind and other clean energy projects and makes some of those credits refundable. The White House proposal would provide more certainty to wind and solar companies, which rely on federal subsidies.

The Biden infrastructure plan, unveiled earlier this spring, disappointed some environmentalists and progressives who contended much more was needed to reach the scale needed to combat the climate crisis. The White House has also tried to reconcile efforts to address the climate emergency with outrage over alleged human-rights abuses in China’s Xinjiang region, which makes about halfof global supply of polysilicon, a material critical for solar panels.

An alternative plan from Wyden consolidates the existing menu of tax breaks, which includes more than 40 separate provisions, into three technology-neutral credits targeting electricity, transportation and energy conservation. All energy sources qualify, so long as they have zero or net negative carbon emissions. The plan also includes manufacturing tax credits for a range of technologies and eliminates breaks for oil, gas and coal.

The Finance Committee advanced Wyden’s $259.5 billion package on May 26, making it a candidate for a broader infrastructure deal later this year. Ossoff is hoping to convince Wyden and his other fellow Democrats to prioritize solar energy while they have majorities in both chambers of Congress.

“There is a clear path forward under current Senate rules for the kind of generational investment in infrastructure and clean energy that we need. It will require a combination of bipartisan legislation and the use of the budget reconciliation legislation,” Ossoff said, referring to a fast-track procedure to move legislation through the Senate without Republican support.

On other matters, Ossoff said he was still studying the bipartisan infrastructure plan being worked on by 11 Republicans and 10 Democratic senators, saying he was focusing on how it would be paid for.

He broadly called the effort at bipartisanship “encouraging,” but was not ready to endorse the plan. That proposal would cost about $1.2 trillion over eight years. Senator Bernie Sanders of Vermont and House Speaker Nancy Pelosi are among those who’ve said they wouldn’t support the framework if it included measures such as raising the gas tax or a fee on electric vehicles.

Ossoff said he reserves the right to support or oppose the legislation in whatever form might actually reach the floor.

— With assistance by Ari Natter, Laura Davison, and Billy House

(Updates with company response in eighth paragraph.)