By Letting the Innovation Bill Fall Apart, Congress Misses a Chance to Spur Clean Energy Technology

For over a year, Congress has tried to pass an innovation bill to address supply chain resiliency, national security, and the United States’ ability to compete in the global economy. The Senate’s version of this legislation, United States Innovation and Competition Act, and the House’s version, the COMPETES Act, have now undergone months of scrutiny as a bipartisan committee has tried to reconcile their differences to finally bring a finished bill to a vote. The legislation created a real opportunity for the United States to invest in itself and its future. And now, the legislation is on the verge of falling apart. At the beginning of July, Senate Minority Mitch McConnell (R-KY) threatened to withdraw Republican support from the competition legislation if Democrats continue to pursue a separate, progressive, bill under Senate reconciliation rules that bypass the filibuster. In the scrambling that has happened since, Congress is now poised to vote on a much smaller piece of legislation centered around investments in domestic semiconductor production. In doing so, Congress is scrapping a number of other provisions that would have benefitted U.S. competitiveness efforts—including provisions that would have also helped the climate.

A part of the legislation that has been left behind are provisions on clean energy. The House’s COMPETES Act included a commitment to allocate $3 billion toward building a domestic solar manufacturing base. It also included provisions designed to prevent solar imports from countries that are trying to avoid antidumping and countervailing duties, or tariffs. Critics expressed criticism regarding the clean energy provisions’ place in the bill even before McConnell’s threats, arguing that the investments were wasteful to pursue. And yet, the solar sector is exactly the type of industry that should be strengthened in any innovation and economic competitiveness effort. U.S. solar production has fallen drastically over the past decades due to its inability to compete with China, which produces the majority of the world’s solar components. As a consequence, the United States has lost opportunities to build supply chain resiliency, create manufacturing jobs, and spur innovation.

While the solar cell was invented in the United States, China grew to dominate virtually the entire solar supply chain in the 2000s through massive investments in its production (although it has been accused of using unfair subsidies, forced technology transfers, and forced labor to do so). The result? Solar technology became low-cost and scalable, while nearly decimating the U.S. solar manufacturing base in the process. The global share of U.S. solar manufacturing has declined by 80 percent in the past decade. Though the United States has tried, it has largely failed to push back. Cheap prices have helped the installation industry grow, but they have also forced the United States to be increasingly reliant on imports from East Asia. Investments like those in the COMPETES Act could have helped at least begin to push the needle in the opposite direction.

Beyond the desire to decrease reliance on China, reshoring the U.S. solar industry brings the potential for job creation. Linking renewable energy to economic competitiveness is at the heart of the Biden Administration’s climate strategy: the philosophy that clean energy will bring good-paying manufacturing jobs. And in the context of solar, there’s reason for optimism. Jobs in the American solar industry have increased 167 percent in the past decade. It is one of the fastest-growing industries today, growing five times faster than the overall job growth rate. In 2020, 44 percent of all new electric capacity generated was solar energy, the most of any energy type, attracting more than $25 billion of private investment. While solar at large has grown, this advance is mostly in installation, not manufacturing. That’s part of what makes investments like these attractive. The demand for solar is growing, but the United States is failing to keep up.

The other case for investing in solar manufacturing lies in the potential for innovation. Technological progress in U.S. solar technology has struggled. As solar prices have dropped, research and development intensity, patenting, and start-ups in the solar space have too. China’s dominance of the solar industry has become so solid that the barriers for new alternative technologies are increasingly higher, cutting off pathways that could lead to cheaper and better ones. This is particularly important as studies have shown Chinese solar production is two times more coal-intensive than other producers. If the United States could succeed in reshoring solar manufacturing, there would be greater opportunities to innovate solar technology. Manufacturing has historically been the primary driver of technological innovation. Bringing solar production home would enable better feedback between engineers and managers in the industry, creating opportunities to iterate and facilitate product innovation and efficiency.

To be sure, it’s unlikely the $3 billion investment in COMPETES would reverse the present trends of solar manufacturing entirely on its own. The U.S. domestic solar manufacturing still faces large barriers to bringing down costs and competing globally. But this funding would have represented a commitment from the federal government towards achieving this goal in a time when congressional climate action has been scarce and growth in the solar industry is beginning to slow – at a time when gas prices have soared and climate-related weather events have ravaged parts of the country.

For decades, the solar industry has been reshaped by Chinese dominance, hurting both the U.S. economy and innovation. The actions on solar in COMPETES represented a commitment to spurring not just clean energy, but American manufacturing and ingenuity. The abandonment of these provisions places them alongside a number of setbacks for solar energy—including the expected exclusion of clean energy spending, due to the opposition of Sen. Joe Manchin (D-WV), from a budget reconciliation package the Democrats plan to pass prior to the August congressional recess. While there were many political factors in play that have put us where we are, the failure to include meaningful solar provisions in a final innovation bill is a missed opportunity, and it is unclear if Congress will get another shot anytime soon to get things right.