The House Energy and Commerce Committee is set to vote this week on the possible repeal of the $27 billion Greenhouse Gas Reduction Fund, which hasn’t been distributed yet.
That taxpayer-funded giveaway to the ailing solar industry and environmental nongovernmental organizations lacks both sufficient accountability and utility.
The fund is structured to pick winners and losers in the energy market, to subsidize Chinese companies that use forced labor, and to undermine the reliability of the power grid.
As Rep. Bob Latta, R-Ohio, said at an Axios clean energy roundtable on Tuesday, “When we’ve picked, we lose.”
The fund’s $27 billion would allocate grants only for renewable energy projects, which would disadvantage conventional energy producers (including nuclear), raise consumer costs, and create a slush fund for green special interests.
All of this is in addition to the solar industry’s $37 billion in federal subsidies received between 2016 and 2022.
Since these tax subsidies largely benefit those with incomes high enough to install solar panels and benefit from the tax breaks, working-class and minority Americans have disproportionately shouldered the increased electricity prices that come from the cost of building out renewables and transmission infrastructure. In California alone, Pacific Gas and Electric rates have increased 127% over the past 10 years.
Some—such as Jennifer Hernandez, a leading environmental litigator in California who also teaches land use and environmental law at the University of California and Stanford Law School—equate these policies to a Green Jim Crow.
Additionally, Donna Jackson of the National Center for Public Policy Research testified before Congress that “creating higher energy costs is increasingly keeping [renters] out of homeownership.”
California, the state with the largest percentage of solar capacity, has residents who pay more than 29 cents per kilowatt-hour, almost double the state average of 16 cents per kilowatt-hour.
The fund intends to distribute $7 billion to select disadvantaged communities for solar panels, but even communities that do not receive grants see increased electricity prices.
Communities that would receive subsidized solar panels might be unable to sell excess electricity back to the grid. The Energy Information Administration has reported that, due to transmission line overload, California’s primary grid operator cut off or curtailed a record 2.4 million megawatt-hours of utility-scale wind and solar output in 2022, a 63% increase from 2021.
Additionally, due to payout restructuring from the California Public Utilities Commission, residential solar owners must now include the cost of transmission, leading to 75% of California rooftop-solar companies being at a high risk of bankruptcy. Already, more than 100 solar companies declared bankruptcy in 2023 as rooftop-solar sales are down between 66% and 83% since 2022.
Silicon Valley Bank, which financed 60% of those community solar deals and banked billions of dollars on these green investments, underwent a banking crisis and restructuring. Furthermore, even if these community projects fail, recipients have no obligation to return the funds.
To add insult to injury, 80% of solar components are coming from China. As such, solar panels purchased by the fund will help finance the Chinese Communist Party’s forced labor of Uyghurs, Kazakhs, Kyrgyzs, and Tibetans.
Congress passed the Uyghur Forced Labor Prevention Act to stop slave labor from subsidizing the solar industry’s supply chain. However, a Commerce Department investigation found that companies are circumventing the act. Chinese companies are shipping solar panels to other Southeast Asian countries and then sending solar components on to America with false-origin paperwork.
Despite these findings, the Biden administration resumed importation from these illegal supply-chain products to continue the subsidy-fueled build-out of the U.S. solar industry.
Moreover, the potential misuse of these funds is deeply concerning as politically favored projects of questionable viability are particularly suspected of funding mischief.
One can only hope that extremist environmental nonprofits such as the Climate Emergency Fund—supporters of which recently poured red powder on the U.S. Constitution and interrupted a conference at The Heritage Foundation in the name of climate change—will not be indirectly financed by the Greenhouse Gas Reduction Fund. (The Daily Signal is the news outlet of The Heritage Foundation.)
Furthermore, America has removed Chinese solar backup batteries from military bases due to security concerns. Importing compromised Chinese batteries, solar inverters, or synchronizers would be detrimental to national security.
If the Biden administration wanted ethical sourcing of solar panels and related material, it would allow for domestic extraction of the critical component minerals, reducing domestic dependence on authoritarian suppliers and creating American jobs.
America needs affordable, reliable, and secure energy sources. By repealing this fund, Congress, with HR 1023, can demonstrate its commitment to maintaining fiscal prudence, establishing a competitive and stable energy market, blocking financing of CCP forced labor, and supporting people who want affordable electricity rates in inflationary times.
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