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Biden Budget Lays Out Battle Lines Against Trump

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President Biden and former President Donald J. Trump offer vastly different policy paths on almost every aspect of the economy.President Biden in his budget this week staked out major economic battle lines with former President Donald J. Trump, the presumptive Republican presidential nominee. The proposal offers the nation a glimpse of the diverging directions that retirement programs, taxes, trade and energy policy could take depending on the outcome of the November election.During the past three years, Mr. Biden has enacted key pieces of legislation aimed at bolstering the green energy economy, making infrastructure investments and reinforcing America’s domestic supply chain with subsidies for microchips, solar technology and electric vehicles. Few of those priorities are shared by Mr. Trump, who has pledged to cut more taxes and erect new trade barriers if re-elected.The inflection point will be arriving as the economy enters the final stretch of what economists are now expecting to be a “soft landing” after two years of high inflation. However, the prospect of a second Trump administration has injected increased uncertainty into the economic outlook, as companies and policymakers around the world brace for what could be a dramatic shift in the economic stewardship of the United States.Here are some of the most striking differences in the economic policies of the two presidential candidates.Sparring over the social safety netAt first glance, Mr. Biden and Mr. Trump might appear to have similar positions on the nation’s social safety net programs. In 2016, Mr. Trump broke with his fellow Republicans and refused to support cuts to Social Security or Medicare. Mr. Biden has long insisted that the programs should be protected and has hammered Republicans who have suggested cutting or scaling back the programs.In his budget proposal on Monday, Mr. Biden reiterated his commitment to preserving the nation’s entitlement system. He called for new efforts to improve the solvency of Social Security and Medicare, including making wealthy Americans pay more into the health program. However, his plans were light on details regarding how to ensure both programs’ long-term sustainability.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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    Flush With Investment, New U.S. Factories Face a Familiar Challenge

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    Worries are growing in Washington that a flood of Chinese products could put new American investments in clean energy and high-tech factories at risk.The Biden administration has begun pumping more than $2 trillion into U.S. factories and infrastructure, investing huge sums to try to strengthen American industry and fight climate change.But the effort is facing a familiar threat: a surge of low-priced products from China. That is drawing the attention of President Biden and his aides, who are considering new protectionist measures to make sure American industry can compete against Beijing.As U.S. factories spin up to produce electric vehicles, semiconductors and solar panels, China is flooding the market with similar goods, often at significantly lower prices than American competitors. A similar influx is also hitting the European market.American executives and officials argue that China’s actions violate global trade rules. The concerns are spurring new calls in America and Europe for higher tariffs on Chinese imports, potentially escalating what is already a contentious economic relationship between China and the West.The Chinese imports mirror a surge that undercut the Obama administration’s efforts to seed domestic solar manufacturing after the 2008 financial crisis and drove some American start-ups out of business. The administration retaliated with tariffs on solar equipment from China, sparking a dispute at the World Trade Organization.Some Biden officials are concerned that Chinese products could once again threaten the survival of U.S. factories at a moment when the government is spending huge sums to jump-start domestic manufacturing. Administration officials appear likely to raise tariffs on electric vehicles and other strategic goods from China, as part of a review of the levies former President Donald J. Trump imposed on China four years ago, according to people familiar with the matter. That review, which has been underway since Mr. Biden took office, could finally conclude in the next few months.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber?  More

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    As Utility Bills Rise, Low-Income Americans Struggle for Access to Clean Energy

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    The Biden administration has deployed various programs to try to increase access to clean energy. But systems that could help lower bills are still out of reach for many low-income households.Cindy Camp is one of many Americans facing rising utility costs. Ms. Camp, who lives in Baltimore with three family members, said her gas and electric bills kept “going up and up” — reaching as high as $900 a month. Her family has tried to use less hot water by doing fewer loads of laundry, and she now eats more fast food to save on grocery bills.Ms. Camp would like to save money on energy bills by transitioning to more energy-efficient appliances like a heat pump and solar panels. But she simply cannot afford it.“It’s a struggle for me to even maintain food,” Ms. Camp said.Power bills have been rising nationwide, and in Baltimore, electricity rates have increased almost 30 percent over the last decade, according to data from the Bureau of Labor Statistics. While clean energy systems and more efficient appliances could help low-income households mitigate some of those increases, many face barriers trying to gain access to those products.Low-income households have been slower to adopt clean energy because they often lack sufficient savings or have low credit scores, which can impede their ability to finance projects. Some have also found it difficult to navigate federal and state programs that would make installations more affordable, and many are renters who cannot make upgrades themselves.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber?  More

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    Europe and Asia React to U.S. Push for Tech and Clean Energy

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    Other governments, particularly in Europe, are trying to counter the Biden administration’s industrial policies with their own incentives.The United States has embarked on the biggest industrial policy push in generations, dangling tax breaks, grants and other financial incentives to attract new factories making solar panels, semiconductors and electric vehicles.That spending is aimed at jump-starting the domestic market for crucial products, but it has implications far outside the United States. It is pushing governments from Europe to East Asia to try to keep up by proposing their own investment plans, setting off what some are calling a global subsidy race.Officials, particularly in Europe, have accused the United States of protectionism and have spent months complaining to the Biden administration about its policies. Governments in the European Union, in Britain and elsewhere are debating how to counteract America’s policies by offering their own incentives to attract investment and keep their companies from relocating to the United States.“I think we all deny that there is a subsidy race, but up to a certain extent, it’s happening,” said Markus Beyrer, the director general of BusinessEurope, Europe’s largest trade association.The United States is deploying nearly $400 billion in spending and tax credits to bolster America’s clean energy industry through the Inflation Reduction Act of 2022. Another $280 billion is aimed at facilities that manufacture and research semiconductors, as well as broader technological research.The Biden administration says the full agenda will unleash $3.5 trillion in public capital and private investment over the next decade. It is both a response to the hefty subsidies offered by governments in China and East Asia and an attempt to rebuild an American factory sector that has been hollowed out by decades of offshoring.Fredrik Persson, left, and Markus Beyrer, executives of BusinessEurope, a large trade group. “I think we all deny that there is a subsidy race, but up to a certain extent, it’s happening,” Mr. Beyrer said.Virginia Mayo/Associated PressThe administration says the investments will put the United States in a better position to deal with climate change and make it less dependent on potentially risky supply chains running through China.But the spending has sparked concerns about taking government resources away from other priorities, and adding to the debt loads of countries when high interest rates make borrowing riskier and more expensive. Gita Gopinath, the first deputy managing director of the International Monetary Fund, said in an interview in October that the spending race was “a matter of concern.”Ms. Gopinath pointed to statistics showing that whenever the United States, the European Union or China enacts subsidies or tariffs, there is a very high chance that one of the other two will respond with its own subsidies or tariffs within a year.“We are seeing a tit-for-tat there,” Ms. Gopinath said.The spending competition is also straining alliances by giving the companies that make prized products like batteries, hydrogen and semiconductors the ability to “country shop,” or play governments against one another other as they try to find the most welcoming home for their technologies.Freyr Battery, a company founded in Europe that develops lithium ion batteries for cars, ships and storage systems, was partway through building a factory in Norway when its executives learned that the Inflation Reduction Act was under development. In response to the law, the company shifted production to a factory in Georgia.“We think it is a really ingenious piece of modern industrial policy, and consequently, we’ve shifted our focus,” Birger Steen, Freyr’s chief executive officer, said in an interview. “The scaling will happen in the United States, and that’s because of the Inflation Reduction Act.”Mr. Steen said the company was keeping the Norwegian factory ready for a “hot start,” meaning that production could scale up there if local policies become friendlier. The company is talking to policymakers about how they can compete with the United States, he said.Some countries are reaping direct benefits from U.S. spending, including Canada, which is included in some of the clean energy law’s benefits and has mining operations that the United States lacks.Canada’s lithium industry stands to benefit as battery manufacturing moves to the United States and companies look for nearby sources of raw material.Brendan George Ko for The New York TimesKillian Charles, the chief executive at Brunswick Exploration in Montreal, said in an interview that Canada’s lithium industry stood to benefit as battery manufacturing moved to the United States and companies looked for nearby sources of raw material.But in most cases, the competition seems more zero-sum.David Scaysbrook, the managing partner of the Quinbrook Infrastructure Partners Group, which has helped finance some of the largest solar and battery projects in the United States, said that America’s clean energy bill was the most influential legislation introduced by any country and that other governments were not able to replicate “the sheer scale” of it.“Other countries can’t match that fiscal firepower,” he said. “Obviously, that’s a threat to the E.U. or other countries.”The United States has sought to allay some of its allies’ concerns by signing new trade agreements allowing foreign partners to share in some of the clean energy law’s benefits. A minerals agreement signed with Japan in March will allow Japanese facilities to supply minerals for electric vehicles receiving U.S. tax credits. American officials have been negotiating with Europe for a similar agreement since last year.But at a meeting in October, the United States and Europe clashed over a U.S. proposal to allow labor inspections at mines and facilities producing minerals outside the United States and Europe. Officials are continuing to work toward completing a deal in the coming weeks, but in the meantime, the lack of agreement has cast a further pall over the U.S.-E.U. relationship.Biden administration officials have continued to defend their approach, saying that the Inflation Reduction Act does not signal a turn toward American protectionism and that climate spending is badly needed. Even with such significant investments, the United States is likely to fall short of international goals for curbing global warming.John Podesta, the senior adviser to the president for clean energy innovation, said in a conversation at the Brookings Institution in October that foreign governments had been doing “a certain amount of bitching.” But he said the U.S. spending had ultimately spurred action from other partners, including a green industrial policy that Europe introduced early this year.“So with the bitching comes a little bit more shoulder to the wheel, so that’s a good thing,” he added.Ursula von der Leyen, president of the European Commission, presented the European Union’s Green Deal Industrial Plan in Brussels in February after the United States enacted the Inflation Reduction Act.Yves Herman/ReutersIn addition to the Green Deal Industrial Plan, which the European Union proposed in February, the bloc has approved a significant green stimulus program as part of an earlier pandemic recovery fund, and additional spending for green industries in its latest budget.Japan and South Korea have proposed their own plans to subsidize green industries. In the technology industry, South Korea and Taiwan both approved measures this year offering more tax breaks to semiconductor companies, and Japan has been setting aside new subsidies for major chipmakers like TSMC and Micron.Europe also proposed a “chips act” last year, though its size is significantly smaller than the American program’s. And China has been pumping money into manufacturing semiconductors, solar panels and electric vehicles to defend its share of the global market and prop up its weakening economy.The competition has also given rise to anxieties in smaller economies, like Britain, about the ability to keep up.“The U.K. is never going to compete on money and scale at the same level as the U.S., E.U. and China because we are firstly under fiscal constraints but also just the size of the economy,” said Raoul Ruparel, the director for Boston Consulting Group’s Center for Growth and a former government special adviser.British officials have made it clear that they don’t intend to offer a vast array of subsidies, like the United States, and are instead relying on a more free-market approach with some case-by-case interventions.Some economists and trade groups have criticized this approach and Britain’s resistance to creating a sweeping industrial strategy to shape the economy more clearly toward green growth, with the assistance of subsidies.“The question is, do you want to capture the economic benefits along the way and do you want to tap into these sources of growth?” Mr. Ruparel asked.TSMC is building a $7 billion plant in Kikuyo, Japan. Japan has been setting aside new subsidies for major chipmakers like TSMC and Micron.Kyodo News, via Getty ImagesSome experts insist fears of a subsidy race are overblown. Emily Benson, a senior fellow at the Center for Strategic and International Studies, said the scale of overall spending by the United States and the European Union was not significantly different, though European spending was spread out over time.“I don’t see some huge kickoff to this massive subsidy race that will completely upend global relations,” Ms. Benson said.Business leaders and analysts said the frustration in the European Union stemmed partly from broader economic concerns after the conflict with Russia. The combination of higher energy prices and tougher competition from the United States and China has pushed down foreign direct investment in Europe and sparked other fears.Fredrik Persson, the president of BusinessEurope, said the companies his group represented had “a very strong reaction” to the Inflation Reduction Act.“We fully support the underlying direction with the green transition, but it came at a sensitive moment,” he said.Madeleine Ngo More

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    Solar Manufacturing Lured to U.S. by Tax Credits in Climate Bill

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    A combination of government policies is finally succeeding in reversing a long decline in solar manufacturing in the United States.Six years ago, an executive from Suniva, a bankrupt solar panel manufacturer, warned a packed hearing room in Washington that competition from companies in China and Southeast Asia was causing a “blood bath” in his industry. More than 30 U.S.-based solar companies had been forced to shut down in the previous five years alone, he said, and others would soon follow unless the government supported them.Suniva’s pleas helped spur the Trump administration to impose tariffs in 2018 on foreign-made solar panels, but that did not reverse the flow of jobs in the industry from going overseas. Suniva’s U.S. factories remained shuttered, with dim prospects for reopening.That is, until now. Last month, Suniva announced plans to reopen a Georgia plant, buoyed by tariffs, protective regulations and, crucially, lavish new tax breaks for Made-in-America solar manufacturing that President Biden’s signature climate law, the Inflation Reduction Act, created.Solar companies have long been the beneficiaries of government subsidies and trade protections, but in the United States, they have never been the object of so many simultaneous efforts to support the industry — and so much money from the government to back them up.The combination of billions of dollars of tax credits for new facilities and tougher restrictions on foreign products appears to be driving a wave of so-called reshoring of solar jobs. Those efforts are succeeding where more modest approaches did not, although critics argue that the gains come at a high cost to taxpayers and may not hold up in the long run.In the year since the climate law was passed, companies have announced nearly $8 billion in new investments in solar factories across the United States, according to data from the Massachusetts Institute of Technology and the Rhodium Group, a nonpartisan research firm. That is more than triple the amount of total investment announced from 2018 through the middle of 2022.Suniva plans to reopen and expand a factory to make solar cells in Norcross, Ga., by spring. REC Silicon will restart this month a polysilicon plant in Moses Lake, Wash., that it shut down in 2019. Maxeon, a Singapore-based producer of solar cells and modules, will start work next year on a $1 billion site in New Mexico.In each of those cases, executives cited the incentives in the climate law as a driving factor in their investment decisions.In recent years, China overtook foreign competitors through huge government investments that allowed it to build factories 10 times as large as American ones.Gilles Sabrie for The New York Times“It was kind of exactly what we had in mind in terms of what would be needed, to pull these kinds of manufacturing initiatives forward,” said Peter Aschenbrenner, Maxeon’s chief strategy officer.China has loomed large over the industry for more than a decade. American demand for solar power has grown sharply since 2010 — by about 24 percent each year in that time, according to the Solar Energy Industries Association, a trade group. But much of that spending went to cheaper foreign solar panels, often made by Chinese companies or with Chinese parts. That raised concerns of American overreliance on China, which is restricting supplies of other key products and whose solar production has been troubled by human rights concerns.U.S. solar manufacturing employment peaked in 2016, with just over 38,000 workers. By 2020, nearly one-fifth of those jobs were gone.Factory solar jobs have begun to grow again.E2, an environmental nonprofit organization, estimated that new investments announced in the first year of the climate law would create 35,000 temporary construction jobs and 12,000 permanent jobs across the entire solar industry in the years to come. Thousands of those permanent jobs are related to manufacturing, including an expected 2,000 at Maxeon’s planned plant in New Mexico.Economists and executives said that surge was largely due to public subsidies that flipped the economics of the solar industry in favor of domestic production.Mr. Aschenbrenner said Maxeon’s cost of domestic solar manufacturing would fall roughly 10 percent, just through a new manufacturing tax credit in the climate law that targets the production of both solar cells and solar modules. That is enough to offset the higher wage and construction costs of American factories, he said.The law also includes credits for customers, like homeowners and utilities, that install solar panels and begin generating electricity from them. If the customer buys panels that are sourced from the United States, like the ones Maxeon is planning, the value of that credit grows 10 percent.Those incentives could be enough to build an American industry that, within a matter of years, could be large and efficient enough to compete with China even without subsidies, Mr. Aschenbrenner said.Others are more skeptical. Analysts at Wood Mackenzie, an energy consultancy, estimate that nearly half the solar module capacity announced by 2026 will not materialize, given that some manufacturers announce long-term plans to gauge feasibility and interest.The recent embrace of subsidies and tariffs by politicians of both parties also irks some economists, who say that while such programs can save or create jobs, they do so at an extremely high cost.A 2021 study by the Peterson Institute of International Economics of past industrial policy programs found that the Obama administration’s 2009 investment in Solyndra, a solar company that ultimately went bankrupt, cost taxpayers about $216,000 for each job created, more than four times prevailing industry wages. Other programs were even more expensive.REC Silicon, a Norwegian maker of polysilicon, entered into a deal with QCells to supply that company’s planned U.S. plants.Megan Varner/Reuters“With certain kinds of technology, you can subsidize and protect your way to having factories,” said Scott Lincicome, who studies trade policy at the Cato Institute, a libertarian think tank. “The question is always about at what cost?”In addition to the costs incurred to taxpayers, protections for the U.S. industry are making solar products more expensive in the United States than in other countries, Mr. Lincicome said. That slows the adoption of solar technology, in contrast to climate goals.Trends in the global solar industry have often been closely linked with government action. The industry started booming over a decade ago when Germany and Japan began offering subsidies for solar power.In recent years, China overtook foreign competitors through huge government investments that allowed it to build factories 10 times as large as American ones. Since 2011, China has invested more than $50 billion in the sector, ultimately capturing more than 80 percent of the global share of every stage in the manufacturing process, according to the International Energy Agency.Tariffs also shaped the industry’s evolution. The United States imposed levies on Chinese solar products in 2012. The next year, China retaliated with tariffs of up to 57 percent on U.S. polysilicon, a raw material for solar panels.That proved to be the death knell for the factory that REC Silicon, a Norwegian maker of polysilicon, was operating in Washington State, said Chuck Sutton, the company’s vice president of global sales and marketing. With few companies still standing outside China, REC Silicon “basically didn’t have any customers left,” he said.REC Silicon worked with the Trump administration to get China to commit to buying more American polysilicon as part of a 2019 trade deal. But China never followed through on those purchases.The turnaround for REC Silicon came, Mr. Sutton said, with the new tax credits this year. The manufacturer entered into a deal with QCells to supply its polysilicon to QCells’ planned U.S. plants. The deal allowed REC Silicon to reopen its Washington site, Mr. Sutton said.To compete with China, the industry needed “a whole-of-government approach,” Mr. Card of Suniva said, that included both tariffs and tax credits for domestic manufacturing.“They are not opposing forces,” he said. “They work together and make each other stronger.” More

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    Biden to Travel to Minnesota to Highlight Rural Investments

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    The president’s push to focus attention on the domestic economy comes as his administration has been dealing with events overseas after the terrorist attacks in Israel.The White House on Wednesday will announce more than $5 billion in funding for agriculture, broadband and clean energy needs in sparsely populated parts of the country as President Biden travels to Minnesota to kick off an administration-wide tour of rural communities.The president’s efforts to focus attention on the domestic economy ahead of next year’s campaign come after three weeks in which his administration has been seized by events overseas following the terrorist attacks in Israel and the state’s subsequent military action in Gaza.The trip will take place as Mr. Biden is urging Congress to quickly pass a $105 billion funding package that includes emergency aid to Israel and Ukraine, two conflicts he has described as threats to democracy around the globe.But the president and his aides are well aware that his hopes for a second term are likely to be determined closer to home. Rural voters like the ones he will address at a corn, soybean and hog farm south of Minneapolis are increasingly voting Republican. A recent poll showed that most voters had heard little or nothing about a health care and clean energy law that is the cornerstone of Mr. Biden’s economic agenda. And the president even faces a challenge within his own party, from Representative Dean Phillips of Minnesota, who announced his long-shot presidential bid last week.Karine Jean-Pierre, the White House press secretary, declined on Tuesday to speak about campaign issues, citing the Hatch Act, which limits political activity by federal officials, but said that Mr. Biden “loves Minnesota.” Administration officials have said Mr. Biden’s trip was planned before Mr. Phillips announced his candidacy.The White House has called the next two weeks of events the “Investing in Rural America Event Series.” It includes more than a dozen trips by Mr. Biden as well as cabinet secretaries and other senior administration officials. The White House said in a statement that the tour would highlight federal investments that “are bringing new revenue to farms, increased economic development in rural towns and communities, and more opportunity throughout the country.”Mr. Biden will be joined on Wednesday by Tom Vilsack, the agriculture secretary. Against the backdrop of a family farm that uses techniques to make crops more resilient to climate change, they will announce $1.7 billion for farmers nationwide to adopt so-called climate-smart agriculture practices.Agriculture Secretary Tom Vilsack will join President Biden in Minnesota and later travel to Indiana, Wyoming and Colorado.Haiyun Jiang for The New York TimesOther funding announcements include $1.1 billion in loans and grants to upgrade infrastructure in rural communities; $2 billion in investments as part of a program that helps rural governments work more closely with federal agencies on economic development projects; $274 million to expand high-speed internet infrastructure; and $145 million to expand access to wind, solar and other renewable energy, according to a White House fact sheet.“Young people in rural communities shouldn’t have to leave home to find opportunity,” Neera Tanden, director of the White House Domestic Policy Council, said Tuesday on a call with reporters.She said federal investments were creating “a pathway for the next generation to keep their roots in rural America.”Gov. Tim Walz of Minnesota, a Democrat, said he expected Mr. Biden to face serious headwinds in rural communities, in large part because of inflation levels.“It is a little challenging, there’s no denying, when prices go up,” Mr. Walz said. “The politics have gotten a little angrier. I think folks are feeling a little behind.”But Mr. Walz also praised Mr. Biden for spending time in rural communities. “Democrats need to show up,” he said.Kenan Fikri, the director of research at the Economic Innovation Group, a Washington think tank, said the Biden administration had made sizable investments over the past two and a half years in agriculture, broadband and other rural priorities.“The administration has a lot to show for its economic development efforts in rural communities,” he said, but “whether voters will credit Biden for a strong economic performance is another question.”Later in the week Mr. Vilsack will travel to Indiana, Wyoming and Colorado to speak with agricultural leaders and discuss land conservation. Deb Haaland, the interior secretary, will go to her home state of New Mexico to highlight water infrastructure investments.Energy Secretary Jennifer M. Granholm will be in Arizona to talk about the electricity grid and renewable energy investment in the rural Southwest.The veterans affairs secretary, Denis McDonough, plans to visit Iowa to discuss improving access to medical care for veterans in rural areas. Isabel Guzman, who leads the Small Business Administration, will travel to Georgia to talk about loans for rural small businesses.Miguel A. Cardona, the education secretary, will go to New Hampshire to promote how community colleges help students from rural areas. Xavier Becerra, the secretary of health and human services, will be in North Carolina to talk about health care access in rural areas. More

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    Solar Supply Chain Grows More Opaque Amid Human Rights Concerns

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    The global industry is cutting some ties to China, but its exposure to forced labor remains high and companies are less transparent, a new report found.Global supply chains for solar panels have begun shifting away from a heavy reliance on China, in part because of a recent ban on products from Xinjiang, a region where the U.S. government and United Nations accuse the Chinese government of committing human rights violations.But a new report by experts in human rights and the solar industry found that the vast majority of solar panels made globally continue to have significant exposure to China and Xinjiang.The report, released Tuesday, also faulted the solar industry for becoming less transparent about the origin of its products. That has made it more difficult for buyers to determine whether solar panels purchased to power homes and electricity grids were made without forced labor.The analysis was done by Alan Crawford, a solar industry analyst, and Laura T. Murphy, a professor of human rights and contemporary slavery at Sheffield Hallam University in England, along with researchers who chose to remain anonymous for fear of retribution from the Chinese government. The London-based Modern Slavery and Human Rights Policy and Evidence Center provided funding.The solar industry has come under stiff criticism in recent years for its ties to Xinjiang, which is a key provider of polysilicon, the material from which solar panels are made. The region produces roughly a third of both the world’s polysilicon and its metallurgical-grade silicon, the material from which polysilicon is made.As a result, many firms have promised to scrutinize their supply chains, and several have set up factories in the United States or Southeast Asia to supply Western markets.The Solar Energy Industries Association, the industry’s biggest trade association, has been calling on companies to shift their supply chains and cut ties with Xinjiang. More than 340 companies have signed a pledge to keep their supply chains free of forced labor.But the report found that major global companies remain likely to have extensive exposure to Xinjiang, and potentially to forced labor, calling into question the progress. The report rated the world’s five biggest solar manufacturers — all with headquarters in China — as having “high” or “very high” potential exposure to Xinjiang.Some Chinese companies, like LONGi Solar and JA Solar, have clear ties to suppliers operating in Xinjiang, the report said. But even within “clean” supply chains set up to serve the United States or Europe, many companies still appear to be getting raw materials from suppliers that have exposure to Xinjiang, Ms. Murphy said.In many cases, according to the information they issue publicly, companies aren’t buying enough materials from outside Xinjiang to meet their production goals, indicating that they may be using undisclosed suppliers. In other cases, companies sent Ms. Murphy information about their supply chains that was directly contradictory.“At every stage, there’s missing information,” she said.China’s dominance over the solar industry has presented a challenge for the United States and other countries, which are rushing to deploy solar panels to mitigate the impact of climate change. China controls at least 80 percent of global manufacturing for each stage of the supply chain.The Chinese government denies the presence of forced labor in the work programs it runs in Xinjiang, which transfer groups of locals to mines and factories. But human rights experts say those who refuse such programs can face detention or other punishments. A U.S. law that went into effect in June last year, the Uyghur Force Labor Prevention Act, assumes that any product with materials from Xinjiang is made with forced labor until proved otherwise.Since then, U.S. customs officials have detained $1.64 billion of imported products, including an unspecified volume of solar panels, to check them for compliance. Solar companies say the detentions have caused widespread delays in solar installations in the United States, putting the country’s energy transition at risk.As solar projects continue to ramp up for the energy transition, the concern is that materials and equipment with ties to forced labor could grow.Over the next decade or so, the solar industry projects it will regularly install double the amount it has in past years, with annual growth expected to average 11 percent. In the near term, the manufacturing capacity in the United States is sufficient to meet less than a third of national demand, according to Wood McKenzie, an energy research and consulting firm.In June, Walk Free, an international human rights group, released a report estimating that 50 million people globally lived under forced labor conditions in 2021, an increase of 10 million from 2016.The organization attributed part of that growth to the much-needed but rapid increase in renewable energy to address climate change. The organization said it supported the energy transition but wanted to stop forced labor as a source of products.“Find it, fix it and prevent it,” said Grace Forrest, founding director of Walk Free.One example in the new report is JinkoSolar, a Chinese-owned company that has done some of the most extensive work to establish a supply chain outside China, including factories in Vietnam, Malaysia and the United States. But the report found that the company’s apparent use of unidentified raw materials from China kept its potential exposure to Xinjiang high.In May, Homeland Security Investigations, an arm of the Department of Homeland Security, raided JinkoSolar’s factory in Jacksonville, Fla., and an office in San Francisco. The inquiry appears to be linked to multiple concerns, among them that JinkoSolar misrepresented the source of some imports containing materials from Xinjiang and incorrectly classified products, resulting in an incorrect duty rate, a person with knowledge of the investigation said.The solar industry has begun publishing less information about the origins of its supplies, making it more difficult for buyers to determine whether solar panels are made without forced labor.Tony Cenicola/The New York TimesA spokesperson for Homeland Security Investigations declined to comment, citing a continuing investigation.JinkoSolar said in a statement that, based on the information available to the company, any speculation that the investigation was tied to forced labor was “unfounded,” and that it had a longstanding commitment to transparency and compliance with U.S. law.The company has also called claims that it had high exposure to Xinjiang “baseless.” It said that it was confident in its supply chain traceability, that products for the U.S. market were made only with U.S. and German polysilicon and that U.S. customs officials have reviewed and released JinkoSolar products.The new report also raised questions about the supply chain for Hanwha Qcells, a South Korean company that has become one of the largest producers of solar panels made in the United States. In January, Qcells announced a $2.5 billion expansion of its Georgia operations that would make it the sole company producing all of its components — ingots, wafers, cells and finished panels — in the United States.Despite Qcells’ growing U.S. presence, the report concluded that the company’s potential exposure to Xinjiang was very high, since the company uses undisclosed suppliers in China for the vast majority of its products.The report also said a Chinese company, Meike Solar Technology, which gets raw material from Xinjiang, reported Qcells as one of its largest customers in the first half of 2022, though Qcells said it had cut off the supplier relationship in 2021.“Qcells has adopted a code of conduct that prohibits forced labor made products in our supply chain, and we terminate agreements if suppliers fail to comply,” the company said in a statement. As part of its strategy to guard against products from forced labor, Qcells said, it uses maps to trace product origins and verification audits to ensure its suppliers follow its code of conduct. The company said none of its North America products had been detained by customs officials.In a statement to the researchers, LONGi said that it always complied with the applicable laws and ethics in jurisdictions where it operated, and that polysilicon from Xinjiang was used in modules that were sold in China.JA Solar did not respond to a request for comment from the researchers or from The New York Times. Both LONGi and JA Solar have been planning to set up factories in the United States.Tax credits and other incentives for clean energy offered under the Inflation Reduction Act of 2022 have been unleashing new investments in the United States. On Friday, First Solar, a U.S.-based manufacturer, announced plans to invest up to $1.1 billion for a new U.S. factory at a location yet to be determined.But Michael Carr, executive director of Solar Energy Manufacturers for America, which represents U.S.-based solar manufacturers, said the United States had fallen so far behind China in solar manufacturing that an enormous amount of work, capital and technical knowledge would be needed to catch up.“It’s hard to have certainty — and some might say impossible to know — the sourcing of the polysilicon until you have a domestic supply of wafers and an alternative to China,” Mr. Carr said.Zolan Kanno-Youngs More

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    Energy Tax Credits, Meant to Help U.S. Suppliers, May Be Hard to Get

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    The Inflation Reduction Act contains tax breaks for solar and wind companies to buy American equipment. Qualifying won’t be easy.In April, Vice President Kamala Harris visited Qcells, a solar panel manufacturing facility in Dalton, Ga., to announce an early triumph of the Inflation Reduction Act: Summit Ridge Energy, one of the nation’s largest developers of community solar projects, would purchase 2.5 million U.S.-made solar panels.Subsidies under the new law brought the price in line with that of imported panels, allowing the companies to fight climate change and promote American manufacturing in one fell swoop.A month later, the Treasury Department issued guidance that functionally would require the solar cells — not just the panels — to be made in the United States for Summit Ridge to have confidence that it will get its 10 percent tax credit on installations that use them. Qcells won’t be able to produce cells until late 2024, sending Summit Ridge scrambling to find cheaper components for projects currently in its pipeline.“There’s not a single solar manufacturer who fully qualifies for this at this moment in time, which makes it difficult and is actually starting to cool investment,” said Leslie Elder, Summit Ridge’s vice president of political and regulatory affairs. “Now we have to re-evaluate based on what can pencil.”On paper, the Inflation Reduction Act is transformative for electricity generation in the United States.The law offers tax credits that could cover up to 70 percent of a renewable energy project’s cost if it checks several boxes meant to support American workers and communities. A new analysis finds that those incentives more than offset the additional expense associated with using domestically produced goods and paying prevailing wages.But guidance rolling out from the Biden administration — presaging formal rules — has raised alarm among energy companies that some of the credits might be difficult if not impossible to use, at least in the near term. The resulting frustration is emblematic of the current stage of climate action: an eye-straining haze of technical rule-making that reflects a tension between urgency and ensuring that the benefits of the energy transition are widely shared.Wally Adeyemo, the deputy secretary of the Treasury, expressed confidence that in combination, the rules would strike that balance.“We have a great deal of clarity about the strategic objectives, and we’re already seeing the impact of that in terms of the economy,” Mr. Adeyemo said. “It isn’t about any one rule. It’s about an ecosystem of rules that have been created under the I.R.A. that put us in a position to go from a country that had underinvested in the clean energy transition to being at the head of the pack.”The analysis, overseen by professors at Princeton and Dartmouth experienced in modeling climate policy’s effects, finds that the incentive aimed at U.S. manufacturers makes domestic solar panels more than 30 percent less costly to produce than imports. With incentives claimed by clean energy developers that meet labor standards and use domestic content, the total cost of generating utility-scale solar electricity could be lowered by 68 percent, and onshore wind energy by 77 percent.The study was funded by the BlueGreen Alliance, a partnership of unions and environmental groups. The organization has championed elements of the Biden administration’s climate agenda that support domestic manufacturing, particularly in places hurt by globalization, automation and the decline of fossil fuels.“Until now, the moral case and the business case did not always align,” said Ben Beachy, the organization’s vice president for industrial policy. “The I.R.A. changes that by offering developers an airtight business case for supporting high-paying jobs and a stronger and fairer U.S. manufacturing base.”The impact of the climate law is already evident, with announcements of 47 new plants to make batteries, solar panels and wind turbines since it was passed, according to American Clean Power, a trade association. Other analyses, including a paper by economists and engineers at the Electric Power Research Institute, the Federal Reserve Bank of Minneapolis and the University of California, Berkeley, found that the law would encourage more low-emissions projects eligible for uncapped tax credits than anticipated, potentially making the costs to the government substantially higher than earlier estimates.A recent study found that federal incentives could reduce the total cost of utility-scale onshore wind energy generation by 77 percent.Alisha Jucevic for The New York TimesBut the BlueGreen Alliance’s study shows significant uncertainty about the impact of rising material costs as demand for domestically sourced aluminum, steel and concrete increases, and doesn’t account for profits manufacturers might command before more competition enters the market. It also projects four million more jobs will be available in wind and solar energy by 2035 than if the I.R.A. hadn’t passed — more than eight times the current employment base — but does not model whether labor supply will measure up.“I find some of their key results to be highly optimistic, and that they likely underestimate some of the economywide costs associated with this scale of clean energy deployment,” said Daniel Raimi, a fellow at the think tank Resources for the Future who reviewed the analysis.At the same time, clean energy companies are digesting the administration’s guidance on how the tax credits will be allocated, and finding some unworkable in ways that may slow deployment.Take the bonus of up to 20 percent for developers that locate projects in low-income communities (which is separate from a bonus of 10 percent for locating in areas struggling with the transition away from fossil fuels). The Treasury Department, wanting to ensure that credits give rise to projects that wouldn’t otherwise happen, will award them only to projects not yet completed. Solar installers would have to sell the system and then wait to see if they got the credit before starting work.“I think we will lose some development in low-income communities this year because of the way that credit has been constructed,” said Sean Gallagher, a vice president for policy at the Solar Energy Industries Association. “Either the developer is going to absorb that difference, or they’ll have to go back to the customer to renegotiate the price, or the project’s not going to happen.”An even thornier issue is the extra 10 percent for using domestically manufactured components. Manufacturers are concerned that while effectively requiring solar cells to be made in the United States to qualify for the credit, the Treasury Department did not require their foundational component — the wafer, a thin slice of silicon that conducts energy — to be domestically produced. That could allow Chinese factories to continue to dominate a key part of the supply chain.“The prices they’re ultimately getting from the developers are undermined because the Chinese wafer manufacturers can crash the prices,” said Mike Carr, the executive director of the Solar Energy Manufacturers for America Coalition.Developers are upset because receiving the credit will, in most cases, require a complex calculation of the cost of each component to reach the threshold of 40 percent U.S.-produced content, and manufacturers are loath to disclose sensitive pricing information. Many also expected a more gradual phase-in process that would allow some of the current U.S. factory output to qualify for the credit, while planning for more stringent requirements.Brett Bouchy is the chief executive of Freedom Forever, a residential solar installation company that did more than $1 billion in business last year. He had planned to build a solar module and cell manufacturing plant in Arizona, which would cost $100 million and employ 1,000 people, to supply his own operations. After the guidance came out, he halted those plans — he couldn’t be confident his panels would qualify for the domestic content credit on top of the 7 cents per watt available to manufacturers.“We cannot make it work,” Mr. Bouchy said. “There is no benefit, because that 7 cents is eaten up with increased U.S. labor costs. Why would you invest $100 million when you really can’t get a return?”Those who support the administration’s approach emphasize that the bonus tax credits are just that: bonuses, not requirements, to offset costs associated with going the extra mile. Developers already get a 30 percent base incentive — and at least 10 years of certainty — for paying prevailing wages and employing apprentices, which most don’t consider very difficult.Todd Tucker, the director of industrial policy and trade at the Roosevelt Institute, said high standards were necessary to make investors confident that new U.S. factories would have enough orders to stay in business.“Once you start indicating that you’re going to allow some flexibility, that, by definition, softens the market signal,” he said.The Treasury Department is still taking comments on the rules for all of the credits, and industry trade associations are vying to change them. Even so, most companies say that the Inflation Reduction Act overall is a powerful force for decarbonization, and that companies have a strong incentive to seek every credit it allows.“It’s amazing how focusing this is for the mind, when people start throwing these kinds of dollars around,” said Sheldon Kimber, the chief executive of Intersect Power, a clean energy developer. “We’re being asked to do a hard thing, but there’s a lot of money in it for us.” More

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    U.S. Solar Makers Criticize Biden’s Tax Credits as Too Lax on China

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    U.S.-based manufacturers of solar products say rules issued by the Biden administration on Friday will “cement China’s dominance” over the solar industryBiden administration rules released on Friday that will determine which companies and manufacturers can benefit from new solar industry tax credits are being criticized by U.S.-based makers of solar products, who say the guidelines do not go far enough to try to lure manufacturing back from China.The rules stem from President Biden’s sweeping clean energy bill, which offers a mix of tax credits and other incentives to try and spur the construction of more solar factories in the United States and reduce the country’s reliance on China for clean energy goods needed to mitigate climate change.The Treasury Department, in guidance issued on Friday, said it would offer a 10 percent additional tax credit for facilities assembling solar panels in the United States, even if they import the silicon wafers used to make those panels from foreign countries. Under the Biden administration’s new climate legislation, solar and wind farms can apply for a 30 percent tax credit on the costs of their facilities.Senior administration officials told reporters on Thursday that they were trying to take a balanced approach, one that leaned toward forcing supply chains to return to the United States. But China’s dominance of the global solar industry has created a tricky calculus for the Biden administration, which wants to promote U.S. manufacturing of solar products but also ensure a plentiful supply of low-cost solar panels to reduce carbon emissions.The officials said that the Biden administration would have the leeway to change the rules when American supply chains become stronger.“The domestic content bonus under the Inflation Reduction Act will boost American manufacturing, including in iron and steel, so America’s workers and companies continue to benefit from President Biden’s Investing in America agenda,” Treasury Secretary Janet L. Yellen said in a statement. “These tax credits are key to driving investment and ensuring all Americans share in the growth of the clean energy economy.”Critics said the new rules would not go far enough to give companies incentives to move the solar supply chain out of China.Mike Carr, the executive director of the Solar Energy Manufacturers for America Coalition, which includes solar companies with U.S. operations like Hemlock Semiconductor, Wacker Chemie, Qcells and First Solar, called the move “a missed opportunity to build a domestic solar manufacturing supply chain.”“The simple fact is today’s announcement will likely result in the scaling back of planned investments in the critical areas of solar wafer, ingot, and polysilicon production,” he said in a statement. “China is producing 97 percent of the world’s solar wafers — giving them substantial control over both polysilicon and cell production. We fear that this guidance will cement their dominance over these critical pieces of the solar supply chain.”A four-acre solar rooftop in Los Angeles. The Biden administration wants 100 percent of the nation’s electricity to come from carbon-free energy sources by 2035.Mario Tama/Getty ImagesThe Biden administration has set an ambitious goal of generating 100 percent of the nation’s electricity from carbon-free energy sources by 2035, a goal that may require more than doubling the annual pace of solar installations.The United States still relies heavily on Chinese manufacturers for low-cost solar modules, although many Chinese-owned factories now make these goods in Vietnam, Malaysia and Thailand.China also supplies many of the key components in solar panels, including more than 80 percent of the world’s polysilicon, which most solar panels use to absorb energy from sunlight. And a significant portion of Chinese polysilicon comes from the Xinjiang region, where the U.S. government has banned imports because of concerns over forced labor.Other companies in the solar supply chain, which rely on imported components, were more positive about the Treasury Department’s guidance.Abigail Ross Hopper, the chief executive of the Solar Energy Industries Association, said the guidance was an important step forward that would “spark a flood of investment in American-made clean energy equipment and components.”“The U.S. solar and storage industry strongly supports onshoring a domestic clean energy supply chain, and today’s guidance will supplement the manufacturing renaissance that began when the historic Inflation Reduction Act passed last summer,” she said.Congressional Republicans have already targeted the Biden administration’s climate legislation, saying that it fails to set tough guidelines against manufacturing in China and that it may funnel federal dollars to Chinese-owned companies that have set up in the United States.The Biden administration is also dispensing funding to build up the semiconductor and electric vehicle battery industries. Guidelines for that money include limits on access to so-called foreign entities of concern, like Chinese-owned companies. But the Inflation Reduction Act does not contain guardrails against federal dollars going to the U.S. operations of Chinese solar companies.In a congressional hearing on April 25, Representative Jason Smith, chairman of the House Ways and Means Committee, pointed to the Florida facilities of JinkoSolar, a Chinese-owned manufacturer, as being eligible for federal tax credits.“Work at the plant involves robots placing strings of solar cells — which are largely sourced from China — onto a solar panel base,” a fact sheet released by Mr. Smith said.Mr. Biden has also clashed with domestic solar manufacturers over a separate trade case that would see tariffs imposed on solar products imported from Chinese companies based in Southeast Asia.Mr. Biden’s decision to waive the tariffs for two years angered Republicans and some Democrats in Congress, who said U.S.-based manufacturers deserved more protection. In recent weeks, the House and Senate approved a measure to reverse the president’s decision, which Mr. Biden is expected to veto. More