The 2022 climate law unleashed a torrent of government subsidies to help the U.S. build clean-energy industries, but the biggest beneficiaries are foreign companies.
The Inflation Reduction Act has spurred nearly $110 billion in U.S. clean-energy projects since it passed almost a year ago, a Wall Street Journal analysis indicated. Companies based overseas, largely from South Korea, Japan and China, are involved in projects accounting for more than 60 percent of that spending. Fifteen of the 20 largest such investments, nearly all in battery factories, involve foreign businesses, the news outlet further reported. (Related: Get ready for sky-high electricity bills as Green New Deal threatens to increase energy costs by 2,800%.)
Japan's Panasonic, one of the few companies to publicly estimate the impact of the law, could earn more than $2 billion in tax credits a year based on the capacity of battery plants it is operating or building in Nevada and Kansas. The company, which supplies batteries to electric vehicle maker Tesla, is considering a third factory in the U.S. that would lift that total.
The climate law is designed to build up domestic supply chains for green-energy industries but the technology for building batteries and renewable-energy equipment resides overseas so the incentives are leading the companies to invest in the U.S. with domestic businesses.
Meanwhile, the $400 billion federal clean-energy lending program that has faced criticism for moving too slowly is stepping up efforts to push cash out the door before the election.
DOE has $400 billion to pour into businesses that promote green-energy projects
Department of Energy's (DOE) Director of the Loan Programs Office Jigar Shah has $400 billion of government funds to pour into businesses that promote green-energy projects. But he has to do it under the eye of critical lawmakers, cautious bureaucrats and the White House.
Shah has begun writing bigger checks, including a record $9.2 billion commitment to a Ford joint venture making batteries in Tennessee and Kentucky.
Largely quiescent for almost a decade, the Loan Programs Office designed to finance businesses for the country's energy transition, was unable to borrow from traditional lenders, often because their technology was seen as too risky.
Now, the probe of the DOE green lending arm threatens to slow the rollout of new clean energy technology that can replace fossil fuels, a key piece of Biden's climate agenda.
Senator John Anthony Barrasso and Representative Cathy McMorris Rodgers, who chairs the House's Energy and Commerce Committee, have requested reams of documents from the DOE relating to the Loan Programs Office. They have also asked the agency's inspector general to investigate Shah, alleging his work with a non-governmental clean tech group he founded raises doubts about the program's impartiality.
Biden administration officials fear that if former President Donald Trump is elected, the office would stop making loans.
"The election is everything," said Adam Forgie, the Democratic mayor of Turtle Creek, Pa., where a startup making zinc batteries for energy storage has opened a factory at the site of an old Westinghouse plant that shut down in the 1980s. The closure was part of a manufacturing-industry collapse that destroyed thousands of jobs in Pittsburgh and surrounding areas like Turtle Creek.
The startup Eos Energy has a nearly $400 million commitment from the loan office that was announced a year ago to expand the factory and create several hundred jobs. "Hopefully whoever wins understands the need for business in this town," Forgie said.
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