Democratic Senator Joe Manchin of West Virginia has expressed strong criticism of the Biden administration’s new federal guidance concerning the eligibility of foreign entities of concern (FEOCs) for the Inflation Reduction Act’s (IRA) electric vehicle (EV) tax credits. Manchin, who is the Chair of the Senate Energy and Natural Resources Committee, accused the administration of creating “workarounds” to the IRA’s restrictions on Chinese battery components and called the guidance contradictory to the landmark climate law.
The federal guidance, released by the Treasury Department, outlines rules for identifying FEOCs, including connections to nations such as North Korea, China, Iran, and Russia. Manchin specifically took issue with provisions that allow exceptions for certain trace critical minerals, which the Treasury Department stipulated comprise less than 2 percent of critical minerals used in batteries.
The guidance has drawn sharp criticism from Manchin, who authored the Inflation Reduction Act, claiming that it allows Chinese companies to exploit taxpayer EV tax credits, which goes against the law’s intent. He plans to pursue legislation to counter the guidance and to support any lawsuit challenging it. The Senator denounces the guidance for opening the door for Chinese firms to continue providing EV battery parts and materials for vehicles eligible for credit.
In response to the release of the proposed U.S. guidance on tax credits for EVs, the Seoul government welcomed the move, emphasizing that it will help alleviate uncertainties surrounding the 2022 Inflation Reduction Act. The Ministry of Trade, Industry and Energy stated that the timely release of FEOC requirements will address the concerns of battery manufacturers and reduce uncertainties in their investment and business operations.
The disagreement over the federal guidance points to the broader challenges and debates surrounding the implementation of policies related to electric vehicles, foreign entities, and tax incentives. The Biden administration’s guidance has become a focal point of contention, with Senator Manchin and others expressing strong objections to its provisions and potential impact on the EV industry and tax credit program. The clash underscores the complexity and sensitivity of balancing environmental and economic considerations in the development and regulation of clean energy technologies.
