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Foreign Companies Are Raking In Billions In Subsidies From Biden’s Signature Climate Law

Foreign companies have been the biggest winners of President Joe Biden’s 2022 signature green energy and health care bill to date, according to analysis conducted by The Wall Street Journal.

Overseas corporations, primarily from China, Japan and South Korea, could stand to reap billions in U.S. government subsidies made available through the Inflation Reduction Act (IRA) in the coming decade, according to the WSJ. Projects tied to foreign corporations made up 15 of the 20 largest projects the WSJ examined that are receiving a boost from IRA incentives and subsidies.

In total, the WSJ analysis examined 140 green energy-related projects that cumulatively account for about $110 billion in investments. The bill will provide around $1.2 trillion in incentives for green energy development over the next decade, and analysts estimate that it will spur some $3 trillion in green energy-related investment in the same time span, according to analysis conducted by Goldman Sachs in April.

A key driving cause for the involvement of foreign firms in subsidy-eligible products is the lack of domestic supply chains for the critical raw materials and more complex component parts for Biden administration-favored green technologies, like solar panels and electric vehicles, according to the WSJ.

At least 10 development projects reviewed by the WSJ, which together represent almost $8 billion in investments, involve corporations located in China or maintaining deep ties to China, the report continues.

“What we’re seeing is foreign policy conflict with climate policy and trade policy,” Aniket Shah, head of environmental, social and corporate governance (ESG) strategy for Jefferies, said to the WSJ. “We’re going to have to decide as a country what matters more: our enmity with China or our desire to decarbonize quickly.”

One such project is a $3.5 billion venture between Ford and Chinese firm CATL to build a battery plant in Michigan, a project which has drawn scrutiny from officials skeptical of Chinese influence, according to the WSJ. Another Chinese firm, Gotion, Inc., is involved in the development of a $2.4 billion factory in Michigan that will produce component parts for batteries, according to the WSJ.

The Department of Energy (DOE) rejected an application for $200 million in taxpayer dollars from Microvast, a company which has extensive financial ties to China that provide 60% of the firm’s revenue, according to the WSJ. The DOE considers several factors when evaluating projects for subsidy eligibility, including the possibility of foreign influence, a DOE spokesperson told the WSJ.

Hyundai, a South Korean company, is involved in two projects that jointly account for more than $10 billion in investment, according to the WSJ.

Panasonic, a major Japanese conglomerate, may end up reaping $2 billion in tax credits dollars per year as tax credits earned from its battery plant operations in Kansas and Nevada, according to the WSJ. Panasonic supplies batteries to Tesla to use in its electric vehicles, and the company is considering expanding its U.S. manufacturing operations, a move which would make Panasonic eligible for even more lucrative tax credits, according to the WSJ.

The White House and the DOE did not respond immediately to a request for comment.

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