BEIJING/WASHINGTON (BLOOMBERG, REUTERS) - US Senator Joe Manchin's surprise rejection of a US$1.75 trillion (S$2.95 trillion) economic plan with crucial climate provisions is having an impact on global solar and electric vehicle (EV) stocks.
Chinese solar firms Trina Solar fell as much as 7.7 per cent and Longi Green Energy Technology slipped as much as 3.3 per cent in Shanghai. The Build Back Better Act would have included a record US$550 billion for climate measures in the United States, the world's second-biggest market for renewable energy after China.
"This is our last, best chance to tackle the climate crisis," said Ms Lori Lodes, executive director of clean energy lobbyist Climate Power. "Our country, our economy and future generations cannot afford Congress to kick the can down the road any longer."
As passed by the House in November, the Bill would have set aside roughly US$300 billion to expand tax credits for renewable power, biofuels, energy efficiency and electric vehicles.
The Bill also included an increase in tax credits for power plants and other facilities that employ carbon capture technologies, and new tax credits for energy storage, transmission projects and hydrogen production.
This includes increasing the current US$7,500 EV tax credit to up to US$12,500 for union-made US vehicles as well as creating a credit of up to US$4,000 for used vehicles.
The Bill would also again make General Motors (GM) and Tesla eligible for tax credits after they hit the 200,000-vehicle cap on the existing US$7,500 credit.
The Bill also includes a 30 per cent credit for commercial electric vehicles.
GM and Ford are both launching electric pickup trucks in 2022 and new tax credits could be crucial to meeting initial sales targets as well as meeting rising vehicle emissions requirements.
Mr Biden wants 50 per cent of new US vehicles to be electric or plug-in electric hybrid by 2030. The administration is expected as soon as this week to finalise tougher new vehicle emissions rules through 2026, automakers say.
Mr Manchin opposed a US$4,500 tax credit for union-made vehicles that is part of the US$12,500 proposal. He called the union credit "wrong" and "not American".
The EV tax credits are backed by Mr Biden, many congressional Democrats and the United Auto Workers (UAW) union and would disproportionately benefit Detroit's Big Three automakers - GM, Ford Motor and Chrysler parent Stellantis NV - which assemble their US-made vehicles in union-represented plants.
Tesla and foreign automakers operating in the US do not have unions representing assembly workers and many have fought UAW efforts to organise US plants.
Toyota Motor, which has a plant in West Virginia but whose US employees are not union members, has lobbied against the US$4,500 union credit.
Toyota announced this month that it is building a US$1.29 billion battery plant in North Carolina, while EV start-up Rivian Automotive said last Thursday that it will build a US$5 billion plant in Georgia.
Vehicles would have to be made in the US starting in 2027 to qualify for any of the US$12,500 credit, which includes US$500 for US-made batteries. It has faced criticism from Canada, Mexico, Japan and the European Union.