A new bipartisan legislation introduced by US Congressmen threatens to pull the plug on Section 45X tax credits
John Moolenaar and Jared Golden want the US government to stop CCP-affiliated companies from accessing US tax credits
Once the legislation is passed by the US House of Representatives, the Senate, and signed by the President, it will end the final rules published in the matter
US Congressmen, John Moolenaar and Jared Golden, plan to block the implementation of the Section 45X Advanced Manufacturing Production Tax Credit with bipartisan legislation to stop Chinese companies from accessing these.
If their legislation is passed by the House of Representatives, the Senate, and signed by the President within 60 legislative days of the Section 45X rule released by the executive branch, the rule would be ended, they point out.
Producers of clean energy equipment within the US, right from polysilicon in the solar value chain to modules, trackers, and other components, are entitled to receive incentives under Section 45X that are tied to the production volume. The final rules for the same were released by the US Department of Treasury in October 2024 (see Final Rules For Section 45X Advanced Manufacturing Production Credit).
The Moolenaar-Golden legislation follows Chinese electric vehicles (EV) manufacturer Gotion that they say benefits from Chinese government subsidies. Gotion plans to develop a battery manufacturing factory in Michigan.
Moolenaar had previously introduced a NO GOTION ACT that would prevent companies based out of China, Russia, Iran or North Korea and their subsidiaries from qualifying for any tax credits under the Inflation Reduction Act (IRA), including 45X.
Their latest legislation targets to block the implementation of the Treasury rule on the Section 45X tax credits. At present, the rule would allow all Chinese Communist Party (CCP) affiliated companies to access American tax dollars for producing in the US.
“Unfortunately, the Biden administration's 45X rule has left the door open for CCP-affiliated companies, like Gotion, to reap billions in taxpayer funding. That’s wrong and the commonsense bipartisan legislation we are introducing today will stop it,” said Moolenaar.
Golden added, “That’s the goal of domestic manufacturing credits: to support America’s production economy. But the Biden administration has consistently included loopholes in rulemaking that allow foreign-owned companies — including those with ties to adversarial foreign governments — to benefit from preferential tax treatment intended for American firms. The administration needs to go back to the drawing board and ensure they are not subsidizing our global competitors.”
Notably, on November 22, 2024, the US Department of Homeland Security’s Forced Labor Enforcement Task Force added 29 Chinese companies to the Uyghur Forced Labor Prevention Act (UFLPA) Entity List, taking the total number of companies on this list to 107. The list includes Chinese polysilicon manufacturer Xinjiang Daqo New Energy.
According to the Select Committee on the CCP, the updated list includes Chinese companies that are tied to both CATL and Gotion.
It stated, “American companies should cut ties with these Chinese Communist Party-aligned battery companies and focus on developing a resilient supply chain free of forced labor. The Biden-Harris Administration rules that would allow American taxpayer dollars to subsidize Chinese batteries tainted by slave labor must also be reversed. Additionally, we must advance our bipartisan legislation, the Decoupling from Foreign Adversarial Battery Dependency Act, to not only eradicate forced labor from U.S. supply chains, but to reduce our dependency on China.”
Earlier in August 2024, a group of bipartisan US Senators introduced a new bill to keep Chinese manufacturers away from accessing Section 45X tax credits (see US Senators Want No IRA Manufacturing Aid For Chinese Solar Producers).
While Joe Biden’s IRA has spurred a domestic solar manufacturing revolution in the country attracting investors from all over the world including China, Donald Trump’s upcoming Presidency has created uncertainty in the industry (see Fate Of US Solar PV Industry Under Donald Trump 2.0).