President Joe Biden’s signature climate bill, the Inflation Reduction Act (IRA), has been a boon for China’s battery market. Biden sig...
President Joe Biden’s signature climate bill, the Inflation Reduction Act (IRA), has been a boon for China’s battery market.
Biden signed the bill into law in August 2022. The legislation created a bevy of green energy subsidies meant to transition United States energy usage away from fossil fuels and, according to Biden weeks before he signed the IRA, “compete with China.”
Since the law was enacted, imports of Chinese components for electric vehicles to the U.S. have skyrocketed, according to a review of government data by The Washington Free Beacon. The data call into question whether the IRA has failed at one of its key goals.
China is a major supplier of rare earth minerals that are used in green energy technology, such as solar panels, electric cars, and wind turbines. While imports for components that use rare earth minerals have risen over the course of Biden’s presidency, the increase became more pronounced after the implementation of the IRA.
Chinese lithium-ion battery imports to the U.S. averaged $473 million per month from January 2021 when Biden took office through July 2022. The next month, Biden signed the IRA into law. Since then, Chinese lithium-ion battery imports have averaged over $1 billion per month, according to the Free Beacon.
In addition to batteries, China is benefitting from the IRA through mining companies in Africa.
“Nearly 70 percent of cobalt is produced in Africa, mainly in the Congo,” James Madison Institute senior vice president Sal Nuzzo told the Free Beacon. “Okay, so the country may be friendly. However, the mine is owned by a Chinese conglomerate or a multinational controlled by the Chinese government. So you can put the regulation in place — it’s got to be sourced from a friendly country. But who owns the facility that the materials are coming out of?”
Aside from questions over its impact on China, the IRA has come under fire recently in connection with sticky, high inflation in the U.S., according to the Financial Times. Georgia Governor Brian Kemp has blamed the IRA for harming his state’s economy by pushing prices higher too quickly.
“A lot of what the IRA has done, besides throwing money at something that was coming anyway, is also heated the market up and driven costs to go up,” Kemp told the Financial Times. “It’s really tried to manipulate the market, versus the market moving in that direction.”
Because of the IRA, Georgia’s economy has received about $15 billion-worth of investment in green energy projects, largely in the form of manufacturing projects, according to the Treasury Department. Despite the investment, polls show Biden struggling to win over American voters on the issue of his handling of the economy. Americans overall disapprove of Biden’s handling of the economy by 56.8% to 39.4%, according to RealClearPolitics’ polling average.
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