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 US after Washington passed

a landmark climate Bill

that supports local clean energy manufacturing.

Some of China’s top solar panel makers are involved in setting up US 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 United States has rebuilt its credentials as a cleantech manufacturing hub after 2022’s Inflation Reduction Act. The Bill, a signature achievement for the Biden administration, includes US$374 billion (S$498 billion) in new climate-related spending. This 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 the Davos summit. 

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 in Arizona, Longi Green Energy Technology in Ohio, and Jinko Solar 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.

This is due to Washington’s increasingly adversarial approach to Chinese firms, according to Mr 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 (CATL) over its recent tie-up with Ford Motor, as well as the furore linked to national security concerns that has erupted over social media platform TikTok.

This has left Chinese firms fearing they will not get the same treatment as their South Korean or European counterparts, Mr Li said.

“It is not enough for the US to just introduce the... 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 will not be able to talk reasonably any more.”

Cleantech is assuming 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 the 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 will 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 more than 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”.

Trade barriers

Trade barriers in countries such as the US and India are raising the cost of clean energy, Mr Gao Jifan, chairman of another Chinese firm, Trina Solar, told a panel at the Boao forum.

“We should build a mechanism that makes everybody feel safe, instead of building barriers,” he said. 

Clean energy equipment should be manufactured where the cost is lowest, and it should be traded around the globe without any obstacles, he said. Trina is also willing to build manufacturing capacity in the US, as well as Europe, given the supportive policies there, he said. 

Ming Yang’s Mr Zhang said the company could buy parts and equipment from local firms if it did decide to set up in the US. The nation’s infamously hurricane-prone coastal areas will also benefit from deploying its turbines as they are designed to resist extreme winds.

“The US, like China, is a massive renewable energy market,” he said.

“We are willing to enter the US, and we hope that the US will create a fair, inclusive and predictable environment.” BLOOMBERG