GOP Tax Bill Threatens Clean-Energy Credits Over China Supply Links

• US Republican tax proposal would nullify clean-energy incentives for solar, battery, and other projects using Chinese components, putting billions in climate investments at risk.

Republican lawmakers have unveiled a tax package that could gut President Biden’s climate-law incentives years ahead of schedule by disqualifying any clean-energy project reliant on materials from China and other “foreign entities of concern.”

The Republican proposal, meant to help pay for extending President Trump’s 2017 tax cuts, rolls back roughly $560 billion in clean-energy credits. Buried in the bill is language barring developers from claiming key subsidies if their projects contain components, subcomponents, or critical minerals originating in China, Russia, North Korea, or Iran.

That restriction hits the heart of the US renewables sector, which still leans heavily on Chinese-sourced polysilicon, solar cells, permanent magnets, and battery materials. “This would be a complete death sentence for projects that depend on global supply chains,” warned Sandhya Ganapathy, CEO of EDP Renewables North America. Credits for offshore wind, nuclear, carbon capture, geothermal, heat pumps, and biofuels would also be swept into the ban.

The House plans to vote on the measure before the Memorial Day recess. Even if it clears that hurdle, the Senate is expected to rewrite significant portions, yet developers say the mere prospect of supply-chain tests is already rattling investors. Evercore ISI cautioned clients the rules could “create a cloud of uncertainty until the IRS clarifies compliance,” potentially freezing billions in planned projects.

But guidance may be slow to arrive. Under a second Trump administration, the IRS would face little pressure to issue the definitions and safe harbors developers need, said Jesse Jenkins, an energy-policy professor at Princeton University. “That alone could be the kiss of death,” he noted, arguing the proposal jeopardizes the manufacturing renaissance sparked by the Inflation Reduction Act.

Clean-energy advocates contend the United States lacks sufficient domestic capacity to replace Chinese inputs overnight. They fear that stripping credits now would stall gigafactory investments already on the books, undercutting job creation in swing-state manufacturing hubs.

Republicans counter that taxpayers should not subsidize supply chains tied to geopolitical rivals, pointing to last month’s continent-wide blackout in Europe as proof grids must be secure as well as green.

With just days before the House vote, lobbyists are scrambling to carve out exemptions or soften the foreign-entity definitions. But unless those efforts succeed, the bill could redraw the economics of US clean-energy development long before its official 2033 sunset.