Solar, EV firms say Republicans' debt limit a 'stunt' that could cost jobs

Hanwha Solutions

27/04/2023 11:00

By Andy Sullivan and Valerie Volcovici
       WASHINGTON, April 27 (Reuters) - Solar and EV companies
are warning that a Republican plan to slash federal spending in
exchange for a hike in the U.S. debt ceiling could hobble the
tax incentives that unleashed billions of dollars in green
investment and created tens of thousands of jobs in Republican
districts over the past year.
    The Republican-controlled U.S. House of Representatives on
Wednesday passed a bill that would revoke tax breaks and other
clean-energy and manufacturing incentives included in Democratic
President Joe Biden's Inflation Reduction Act of 2022, which has
spurred investment in battery plants, electric vehicles,
solar-panel factories and other businesses.
    The measure has little to no chance of making it through the
Democratic-controlled Senate and Biden has vowed to veto it if
it made it to his desk, but still sparked concern among
executives in the sector.
    "What I am concerned about is why this type of thinking is
coming from the party that is supposed to be for American
working people and small businesses and energy security," said
Tony Frisone, a Republican who is chief executive of CZAR-Power,
an Ohio-based startup that is developing devices that can
fast-charge electric cars.
    The pushback is another sign of widening divisions between
U.S. businesses and their traditional allies, as Republicans
have come to rely less on corporate donations and grown
increasingly willing to criticize businesses they say are
advancing liberal social policies.
    The Inflation Reduction Act, which passed last year without
a single Republican vote, is a signature Biden accomplishment
and offers $369 billion investment to address climate change.
This includes $270 billion in tax incentives. 
    The Chamber of Commerce, which historically has supported
Republican policies that were thought to be more pro-business,
said it does not want the tax incentives to be repealed - even
though it opposed passage of the IRA last year, its top energy
lobbyist Marty Durbin told the Senate energy committee on
Wednesday.
    The Republican package would not revoke the IRA's corporate
tax hikes and price controls on pharmaceuticals, which drew the
most vocal opposition from business groups.
    Repealing the law's tax credits would save the United States
$570 billion over the coming 10 years, according to the
nonpartisan Congressional Budget Office -- roughly 12% of the
bill's $4.8 trillion budget savings.
    But that could also undercut an industry that has announced
191 new projects since last August, accounting for 142,000 jobs,
according to Climate Power, an advocacy group.
    
    'NOT THE TIME TO GO BACKWARDS'
    Insulation maker CleanFiber said its expansion plans,
involving hundreds of new jobs and hundreds of millions of
dollars in investment, would be threatened if the tax credits
were revoked.
    "Now is not the time to go backwards," CEO Jonathan
Strimling said in a statement.
    Republicans have portrayed the tax credits as a distortion
of the free market that gives unfair advantage to clean-energy
producers over fossil fuels. Their package also includes
incentives for increased oil and gas production.
    More than half of the green energy projects announced since
the bill's passage are located in areas represented by House
Republicans, according to Climate Power, and are projected to
create 77,261 jobs. 
    Biden has made those new jobs central to his 2024
re-election effort. 
    Vice President Kamala Harris earlier this month visited one
of those projects, a Hanwha Solutions Corp  009830.KS  Hanwha Q
Cells solar panel factory in Dalton, Georgia, in a district
represented by hardline Republican Representative Marjorie
Taylor Greene. Greene did not participate in the event, though
she has praised QCell's investment in her district.
    Representative Nancy Mace, whose coastal South Carolina
district has seen $3.5 billion in new clean-energy investment
since last August, said she was mindful of the risk.
    "Solar is really big across the state of South Carolina, so
looking at the way small businesses are treated in that proposal
gives me concern," Mace told Reuters. She ultimately voted for
the bill on Wednesday.
    Industry officials said the House bill sends a chilling
message, by signaling that the incentives are not widely
supported.
    "It's completely destabilizing. We are not just talking
about cynical American investors that are used to this kind of
politics, but you are influencing capital decisions made in
Korea and Europe" said Peter Davidson, CEO of investment firm
Aligned Climate Capital.
    Frisone, of CZAR-Power, said he plans to call Republican
officeholders to make his case, adding, "This is a political
stunt -- why are we doing it?"

 (Reporting by Andy Sullivan and Valerie Volcovici; additional
reporting by Richard Cowan; Editing by Scott Malone and Aurora
Ellis)
 ((andy.sullivan@thomsonreuters.com; +1 202 421 5603;))