OPINION:
As Americans continue to endure high food and energy prices under the Inflation Reduction Act of 2022, it’s important to take stock of some of the biggest beneficiaries of this Biden boondoggle: First Solar and Qcells.
Taxpayers subsidize First Solar and Hanwha Qcells under the Inflation Reduction Act, or IRA, at astronomical rates. First Solar has 3,700 employees and 10 gigawatts of annual U.S. capacity, while Hanwha Qcells has 2,000 employees and 8.4 GW of U.S. manufacturing capacity.
Under the IRA, the companies will receive $1.7 billion and $900 million per year respectively, or about $450,000 every year for each person they employ.
Arizona-based First Solar and South Korea’s Qcells use different technology but are quickly becoming strange bedfellows. Both solar manufacturers have amassed small armies of lobbyists and a cadre of former Biden staffers to lobby the White House and Congress. They helped pass the IRA and recently secured preferred vendor status for all federal energy procurements.
First Solar’s and Qcells’ lobbying and influence over President Biden’s Department of Energy has been so effective that the government is essentially funding their operations. The subsidies cover First Solar’s entire product cost, while Qcells underwrote nearly all of its Georgia manufacturing investment through a $1.45 billion DOE loan guarantee.
Emboldened by their taxpayer-financed bounty, First Solar and Qcells launched an offensive antidumping countervailing duty, or AD/CVD, trade case against four Southeast Asian countries — Malaysia, Vietnam, Cambodia and Thailand — knowing their connection to the administration would give them cover.
A common misconception is that solar panels from China come to the U.S.; instead, they come from nations the U.S. is friendly with, such as those in Southeast Asia. Ironically, despite some U.S. manufacturing, First Solar and Qcells are among the largest importers from the countries they accuse of dumping.
As the AD/CVD case progressed, it was revealed that Qcells was receiving significant subsidies and was slapped with one of the highest tariff rates in Malaysia. Import data shows Qcells responded not by ending the subsidies, but by shifting its Malaysia production to factories in South Korea, which is not part of the case. Moreover, DOE data suggested that Qcells may have driven down prices with a flood of imports from South Korea, which brought the case in the first place, noting that “prices declined most steeply for modules from South Korea.”
First Solar’s involvement in the case is suspicious since its toxic thin film solar panels were not subject to the complaint. The Biden administration signaled early when the case was filed that it was likely to side with the two companies’ complaints, which would result in more tariffs placed retroactively on products coming from those countries. Combined with taxpayer subsidies and preferred vendor status, retroactive tariffs on Southeast Asia would result in a duopoly in the American solar market.
While it seems like a repeal of the IRA is off the table, there is an opportunity for reform. House Speaker Mike Johnson has stated that a Republican sweep would not lead to a wholesale repeal of the law. “You’ve got to use a scalpel and not a sledgehammer because there’s a few provisions in there that have helped overall,” the Louisiana Republican said.
These comments came on the heels of over a dozen moderate Republicans writing a letter to him asking to preserve much of the IRA, citing projects in their districts.
With Republicans in control of Congress and the White House, there is ample opportunity for reform. Specifically, solar panel assembly, which has the least required capital investment and fastest return on investment, should have its subsidies drastically reduced. Polysilicon, the raw material for crystalline solar, which has the most required capital investment and longest return on investment, should receive more benefits. This would have the long-term effect of developing a full domestic supply chain for solar energy.
Building polysilicon production here in the U.S. ensures taxpayer subsidies stay in the U.S. and aren’t passed on to foreign energy conglomerates. First Solar and Qcells, which rely on foreign and China-based supply chains for their products, are effectively taking money out of the U.S. economy. Certainly, some remains here in the U.S., but Americans are financing economic growth elsewhere without a domestic supply base.
U.S. polysilicon producers, on the other hand, are the first step in the solar supply chain. IRA subsidies at this stage of production guarantee U.S. tax dollars have a multiplier effect here in the U.S. Had the IRA been written in this manner, consumers might have seen lower energy costs. More of the money needs to stay in the U.S. to benefit Americans.
While the fate of the IRA may be out of the hands of President-elect Donald Trump for now, there are several actions his administration can take on day one to rein in this boondoggle. First, Mr. Trump can extend 201 tariffs on imported thin film panels from Malaysia, Vietnam and India. He can also impose added tariffs on toxic tellurium from China. Finally, Mr. Trump should immediately revoke First Solar’s and Qcells’ preferred provider status to the federal government.
Crony capitalism has no place in American politics and only increases the prices for American consumers. It must be undone.
• Bret Manley is executive director of the Energy Fair Trade Coalition. He previously worked on Capitol Hill as chief of staff to a senior member of the Congressional Climate Solutions Caucus.
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