Tuesday, May 27, 2025

Solar freedom from China has a price

The cost of a China-free supply chain |
Bloomberg

Today's newsletter looks at measures in the US tax-and-spending bill that could prove decisive in long-running attempts to curb US reliance on China's solar sector. You can read the full version of the story on Bloomberg.com, and for unlimited access to climate and energy news, please subscribe.

Solar freedom has a price

By Jennifer A Dlouhy

A massive tax-and-spending bill passed by the House of Representatives last week marks the culmination of nearly two decades of efforts to decisively wean the US off cheap Chinese solar panels. 

Renewable developers call it the most cynical.

The measure would clamp down on energy tax credits created or expanded by the 2022 Inflation Reduction Act by imposing a slew of new restrictions, including earlier expiration dates and mandates that projects be free of any connection to China and other so-called "foreign entities of concern." Relying on imported materials or components, or having ownership tied to China, could be enough to block project developers from receiving those credits

At first blush, the idea is a natural outgrowth of a longstanding policy push — embraced in Washington by multiple presidents and both political parties — to minimize US reliance on energy technology from China, the world's dominant supplier. 

Renewable energy advocates argue the requirements are so blunt — without exemptions or phased-in timelines — they would likely be decisive in curbing US reliance on China's solar equipment and batteries, but they'd come at the expense of the domestic energy transition.

For years, politicians have tried to achieve a balance, aiming to bolster domestic manufacturing, while also accelerating adoption of clean energy. In 2009, former President Barack Obama's administration attempted to use stimulus money to goose green energy manufacturing inside the US. The same year, Democratic Senator Chuck Schumer of New York condemned the use of federal subsidies for a Texas wind farm that planned to install turbines made in China. 

Read More: American Tax Breaks Are Funding China's Dominance in Solar Tech

Obama's administration went on to impose duties on solar cells and modules from China — which have effectively been expanded to Chinese companies operating manufacturing sites in Southeast Asia too. President Donald Trump in 2018 imposed tariffs on imported solar cells and modules, after a trade probe said they posed a threat to domestic panel producers. 

Now, domestic solar factories are booming — with a surge of new investments in US panel factories thanks in part to demand stoked by former President Joe Biden's 2022 climate law, as well as its tax credits for manufacturing solar equipment, battery parts and other advanced energy components. 

But the US supply of new panels — much less the cells, ingots and wafers they're made from — hasn't caught up with domestic demand. Meanwhile, the "foreign entity of concern" provisions in the House-passed bill, if adopted by the Senate and enacted, "will be complex and burdensome to implement, creating additional risks and disincentives for clean energy developers, especially those that source components globally," according to a memo from the League of Conservation Voters.

What's more, renewable energy developers say the confusion wouldn't clear up anytime soon, since the Treasury Department is likely to take its time to issue guidance on how to interpret the new requirements. Developers continue to lobby the Senate to jettison the House bill's IRA changes.

Workers at the Illuminate solar plant in Pataskala, Ohio. Photographer: Maddie McGarvey/Bloomberg

Read More: Fate of $20 Billion Home Solar Market Lies in GOP Senate Hands

China hawks have cheered the move, saying it's time Washington got serious about truly severing Beijing from US energy supply chains. Continuing to buy imported equipment from China — or from Chinese firms operating manufacturing plants in other countries — only strengthens the supplier's dominance over the energy technology necessary in a warming world. And, critics insist, doing so rewards China for alleged use of forced labor — which Beijing denies — as well as unfair trade practices such as heaping government subsidies on the industry. 

Still, the provisions could make it harder for the US to build its own, independent solar supply chain and to satisfy climbing power demand from artificial intelligence, according to analysts.

Read the full story on Bloomberg.com.

Attracting investment

76%
Mainland China accounted for more than three-quarters of global clean-technology factory investment in 2024, according to BloombergNEF

Local champions

"The United States invented solar technology, and we are committed to protecting and rebuilding our domestic solar industry."
 Jon Toomey
President of the Coalition for a Prosperous America

More from Green

As the US heads into peak hailstorm season, homeowners that have installed solar power face the prospect of chunks of ice damaging their panels.

"Those instances of damage are rare, but the more extreme weather gets with climate change, it's hard to know what the future brings," says Lauren Martin, head of marketing at Freedom Solar Power, a Texas-based solar installer. Last year, the company was called in to repair about a dozen solar systems in Austin pummeled by baseball-sized hail.

Hail caused more economic losses for solar-panel owners than any other hazard, according to the latest data available from GCube Insurance, an underwriter that insures more than 100 gigawatts of renewable energy assets worldwide. While less than 2% of the total claims the company recorded from 2018 to 2023 had to do with hail, they accounted for more than half of insured damage associated with solar projects.

Photographer: OceanProd/iStockphoto/Getty Images

The founder of Chinese solar giant Longi will stand down from his position overseeing day-to-day operations, as deepening losses plague the company and its peers across the sector. Li Zhenguo will no longer hold the roles of general manager, board member and legal representative of the firm he founded two decades ago. 

A river in India and Pakistan is causing extra angst. The water system that flows through both countries has been a source of ongoing tensions between the nations for decades. But India's unilateral suspension of a water-sharing agreement in April, that's been in place with Pakistan for 65 years, signals a new low point in relations.

Climate change is creating new risks for pregnancies. A recent report shows human-caused climate change has doubled the number of dangerously hot days for pregnant women in 9 out of 10 countries in the world, threatening mothers and unborn babies. 

Weather watch

Temperatures are expected to soar in Portugal and Spain this week, with one of the hottest air masses in more than three decades pushing in from Africa.

Daytime highs on Thursday and Friday in southern and central Portugal could reach 40C (104F), according to government forecaster Instituto Português do Mar e da Atmosfera. Similar peaks could be reached in the river valleys of southern Spain, according to forecaster Aemet.

The heat is being driven by a high-pressure system near the Azores that's combining with a low-pressure area to feed in hot, dry air from Africa, government meteorologists say. Some forecast models suggest the air mass being funneled into the region could be the hottest recorded in more than 30 years, according to Aemet.

Read the full forecast on Bloomberg.com — and for more weather insights sent straight to your inbox, sign-up for the Weather Watch newsletter

Worth a listen

With the US government slashing climate incentives and programs, companies working on global warming solutions are being forced to cut costs. On the latest episode of Zero, Akshat Rathi speaks with Jan Wurzbacher, co-founder of Climeworks, a startup that pulls carbon dioxide from the air, about its first major layoffs and what the future holds for the most expensive climate solution. Listen now, and subscribe on Apple, Spotify, or YouTube to get new episodes of Zero every Thursday.

A facade of the collector containers unit at the Climeworks AG Mammoth carbon removal plant in Hellisheioi, Iceland in May 2024. Photographer: Heida Helgadottir/Bloomberg

Attention all filmmakers

Do you have a compelling story you want to tell? The Bloomberg Green Docs competition is open to all eligible filmmakers who would like to compete to win a $25,000 grand prize for a short climate documentary. The aim is to explore our climate future with documentaries that reveal the world we are making today. Films must be under 10 minutes and submissions are now being accepted through June 4. The winner will be announced at the Bloomberg Green Docs Film Festival in Seattle on July 16. Visit the Bloomberg Green Docs official site for more information and rules.

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