Republicans must fix, not repeal, the Inflation Reduction Act

Last month, China requested the World Trade Organization establish a panel to settle its dispute against the U.S. over the tax credits provided by the Inflation Reduction Act (IRA) for electric vehicles and other renewable energy programs. This move by Beijing suggests that President Biden’s signature legislation is hitting the mark, stoking fears in China that, if successfully implemented, the IRA could threaten its dominance in clean energy manufacturing.

The IRA is far from perfect. It was forced through Congress on party lines with little to no Republican input. Congress was able to reach a compromise on other major bills that invest in American competitiveness, such as the bipartisan infrastructure law and the CHIPS and Science Act, and it is unfortunate that Democrats failed to reach across the aisle in the same manner for the IRA. Substantively, the measure has major loopholes, one of which allows for Chinese Communist Party-affiliated companies to benefit from U.S. tax incentives.

But despite its flaws, the IRA has undeniable potential to strengthen America’s clean energy sector and reduce reliance on foreign adversaries. It is already playing a role in advancing two objectives of the 2024 Republican National Committee’s platform: to turn the U.S. into a manufacturing superpower and to make America the dominant energy producer in the world.

Republicans who genuinely prioritize the nation’s long-term economic and national security interests should focus on refining the IRA – rather than repealing it.

The IRA has the potential to ignite American manufacturing capacity in clean energy industries that China currently dominates: wind, solar, electric batteries, nuclear and critical minerals. As the world shifts toward clean energy, the nation that produces these sustainable energy sources will hold a significant advantage, economically, diplomatically and militarily.

Domestic clean energy production bolsters national security by reducing reliance on foreign sources, especially from adversaries like China and Russia. It mitigates the risk of energy supply disruptions and diminishes the leverage hostile nations may have over the U.S.

Investing in clean energy drives economic growth, creates American jobs and revitalizes local economies. While maintaining an all-of-the-above energy policy, including oil and gas, America must embrace the global shift to clean energy to avoid falling behind. If Europe isn’t buying American electric vehicles (EVs) or solar panels, it will purchase Chinese ones, enriching the CCP and increasing western dependence on Beijing.

Fueled by subsidies, unfair trade practices and forced labor, China dominates the clean energy race. In 2023, it produced 61 percent of global rare earth elements and processed a staggering 90 percent, critical for EV batteries and military tech, and now claims state ownership of these metals. China also leads in EV manufacturing, producing 80 percent of the world’s electric-vehicle batteries and challenging major automakers globally. In the solar market, China holds more than 80 percent of the global market share.

Enter the IRA – important, if imperfect. The IRA, implemented as intended, reduces America’s overreliance on China for future energy sources by significantly boosting America’s clean energy production through targeted investments. And it has undeniably strengthened America’s position in the clean energy era. Republicans committed to winning the 21st century must recognize the IRA’s potential – both realized and unrealized – and focus on refining the legislation.

Since becoming law, the IRA has driven nearly $124 billion in private investment into U.S. clean energy, resulting in over 100,000 new jobs across more than 300 large-scale projects. Notably, Republican congressional districts have emerged as key centers for clean energy infrastructure, securing nearly 78 percent of IRA funding and 80 percent of the announced battery production facilities.

Since enactment, the measure has helped create more than 28,000 clean energy and automotive jobs while adding $10 billion to the GDP and generating $7 billion in wages in Michigan alone, a key battleground state. In Georgia, another swing state, the bill has helped create 16,000 jobs and spur $15 billion in investment. North Carolina has seen a similar impact. Republicans must keep this in mind as they determine their next steps on the legislation.

U.S. battery production is projected to soar from 257 gigawatt-hours in 2023 to over 1,000 gigawatt-hours by 2030. This expansion will yield enough batteries for 10 million vehicles annually, enabling U.S. auto manufacturers to reduce their dependence on Chinese batteries.

Still, the IRA remains a flawed law that Republicans need to fix. IRA dollars must only be used to bolster America’s clean energy manufacturing, not Chinese companies.

Unfortunately, the Biden administration has implemented guidance that enables PRC companies to benefit from IRA incentives. The last thing the U.S. government should be doing is funneling taxpayer dollars to Beijing. Sen. Marco Rubio (R-Fla.) and Rep. Carol Miller (R-W.Va.) have advanced legislation such as the Protecting American Advanced Manufacturing Act to close these loopholes. Sen. Sherrod Brown (D-Ohio) echoed this call, creating an opportunity for bipartisan action on the issue.

Republicans should also support Sen. Joe Manchin’s (I-W.Va.) initiative to ensure that vehicles containing any battery components from China are ineligible for IRA Clean Vehicle Credits. Allowing leniency in this area only perpetuates U.S. dependence on Chinese critical minerals.

Ultimately, the IRA represents a pivotal step toward fortifying America’s clean energy infrastructure and reducing reliance on foreign adversaries. With Beijing actively working to undermine the IRA, it would be a strategic blunder for Republicans to help them.

Ryan Costello, a Republican from Pennsylvania, served in the House of Representatives from 2015 to 2019.