Democrat bill targets US solar manufacturing to bolster national energy security

A bill to establish a tax credit for domestic solar manufacturers has been introduced to the US parliament, in an effort to rapidly boost American solar manufacturing, reduce its reliance on imported solar technology, and create tens of thousands of American jobs.

The “Solar Energy Manufacturing for America Act” was introduced over the weekend by Georgia Senator Jon Ossoff – one of two Democrats to retake Georgia Senate seats in special elections held earlier this year, which resulted in the Democrats retaking slim control of the Senate thanks to Vice President Kamala Harris’ tie-breaking vote.

Co-sponsored by Georgia’s other Democratic victor, Reverend Raphael Warnock, as well as Senators Michael Bennet and Debbie Stabenow, the bill seeks the introduction of new tax credits for American manufacturers along every stage of the solar manufacturing supply chain.

Simply, a tax credit is a dollar-for-dollar reduction in income taxes that a person or company would otherwise pay the federal government. Existing renewable tax credits in the United States include production tax credits for both solar and wind projects, which have played a vital role in developing the respective technologies to a point where they are cost-competitive with fossil fuel technologies – and in some cases, significantly cheaper.

Senator Ossoff’s new “Solar Energy Manufacturing for America Act” would introduce tax credits of 11 cents for solar modules, multiplied by the capacity of the module; 4 cents for solar cells, multiplied by the capacity of the cell; $12 per square metre for solar wafers; and $3 per kilogram for solar-grade polysilicon.

Introducing tax credits across the whole supply chain would subsequently give a significant boost to America’s at-home solar manufacturing, in turn reducing its reliance on imported solar products while increasing American jobs, supporting the country’s energy transition, and solidifying its energy independence.

“I’m working to boost American solar manufacturing and accelerate the transition to clean energy,” Senator Ossoff said. “This bill will create tens of thousands of American jobs, support American energy independence, and accelerate the transition from fossil fuels to clean energy.”

“We greatly appreciate Senator Ossoff’s leadership and support for domestic manufacturing,” said Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association (SEIA).

“While the broader U.S. solar industry continues to flourish, America’s solar manufacturing sector has languished. Senator Ossoff’s proposal recognizes this reality. Now is the time to seize the promise of American solar manufacturing.

The proposed tax credit stands in stark contrast not only to American Republican efforts to prop up the country’s ailing and failing coal sector, but also the efforts of Australia’s current federal leadership to similarly stand in the way of a literal global step change away from fossil fuels.

Senator Ossoff’s proposed bill is almost certain to encounter strong opposition from a Republican party still enthralled by the faux populist propaganda in the guise of nationalist rhetoric of Donald Trump. Despite the Senator’s efforts to couch the bill in the language of new jobs – which Republicans have a hard time opposing – its support for a renewable energy is likely to enrage the fossil fuel sector and its powerbrokers.

Similarly, already this week in Australia, we have seen the Morrison Government reject plans to build a massive renewable hydrogen hub in the Western Australia Pilbara region, citing environmental impacts that are “clearly unacceptable” as a pretence to ensure their continued opposition to anything that smells even remotely of clean energy.

“Despite all their talk of ‘technology not taxes’, what the Federal LNP is intent on doing is undermining investor confidence and promoting fossil fuel solutions, and slowing the development of zero emissions industries of the future,” Buckley said in comments to RenewEconomy.

There remain, then, far too many similarities between the American Republican party and Australia’s Liberal and National Party. Both insist they are prioritising the jobs and livelihoods of constituents who barely represent a voting bloc, while they instead remain indebted to and in the thrall of the big-money investors and donors who themselves rely on fossil fuels.

At a time when Democrats in the United States – not to mention countries across the European Union and Asia – envision a clean energy future which creates increasing new sector and high paying jobs, and at a time when so many countries are supporting the expansion of local manufacturing for clean energy and clean technology sectors, there nevertheless remains countries and political parties insistent on propping up and subsidising fossil fuel interests – not for the sake of some fabled horizon of “energy security”, but rather so as to ensure the continued financial success of their political donors and cronies disguised as political friends.

Similarly, America’s production tax credit for solar and wind remains an ongoing support for renewable energy projects, while at the same time Australian renewable projects grind to a halt under the weight of Federal opposition and overwhelmingly burdensome regulatory hurdles.

Earlier this month, US President Joe Biden’s Administration proposed an ambitious $US6 trillion budget for the fiscal year 2022 which includes a hefty $36 billion worth of investments to tackle climate change, an increase of $14 billion compared to 2021.

Included in the proposed budget is a $2 billion increase in the Renewable Energy Production Tax Credit, as well as the creation of a separate tax credit for the production of low-carbon hydrogen.

The Investment Tax Credit (ITC) for both solar and energy storage has been a vital tool in building America’s solar and storage industries, as well as supporting the continued deployment of solar and storage projects across the country. However, on Monday, at the same time as they praised Senator Ossoff’s proposed manufacturing tax credit, the United States’ Solar Energy Industries Association (SEIA) called for a 10-year extension to the ITC and a direct pay option for projects claiming the ITC.

“Solar and storage are proven job creators that can modernize America’s power grid and tackle the climate crisis,” said Abigail Ross Hopper.

“These are economywide benefits that extend far beyond just one industry, and that’s why a diverse coalition of leaders representing multiple sectors, technologies and communities are asking Congress for long-term policy certainty for clean energy infrastructure. The solar and storage industry stands ready to put Americans back to work, but Congress must act now to unleash the clean energy economy.”

The SEIA predicts that an ITC extension and direct pay option would help increase the speed of solar and storage deployment across the country, helping to overcome pandemic-driven economic challenges that still affect clean energy companies, while also providing businesses with the certainty they need to make long-term investments.

The call was backed by more than 100 organisations representing clean energy interests, manufacturers, homebuilders, electric cooperatives, and a variety of other industries.

Again, though, standing in stark contrast to the hopeful call for an ITC extension, new analysis of Australia’s wind energy sector has found that not a single new Australian wind farm project has reached financial close so far in 2021, highlighting significant grid hurdles and falling prices that have spooked investors.

The continued juxtaposition, then, between the indomitable market winds and popular desire to see renewable energy succeed, and entrenched political backwardness in countries like the United States (specifically its Republican Party) and Australia, remains a major concern. The future is easily predictable in the long term, but the immediate future is unclear, as it depends on how long fossil fuel-backed politics are able to keep their death grip on hindering any hint of change.