Clean Energy’s Dirty Little China Secret

Clean Energy’s Dirty Little China Secret

Biden is trying to force America to transition from a global energy superpower into a supplicant to the PRC on our own dime. The new Congress must stop him.

 

The U.S. Department of Energy has awarded a $200 million grant to electric vehicle battery manufacturer Microvast as part of its effort to promote green energy. But there’s a problem.

Ostensibly headquartered in Texas, Microvast actually manufactures most of its products and does the bulk of its business in the People’s Republic of China (PRC). The Houston office exists mainly to facilitate the receipt of “green energy” government subsidies.

 

Unfortunately, the Biden administration is willing to go along with this poorly disguised ruse. The myopic pursuit of cheap renewable energy sources is clearly more important to the administration than preventing American taxpayer dollars from going to the PRC, which will pocket them while simultaneously cornering an energy sector on which the United States may well become dependent, as Microvast may well be just the tip of this iceberg.

Biden’s Energy Department maintains that Microvast is really an American company and that the grants will help disentangle the company from Chinese supply chains and encourage the development of new technologies in the United States. But a simple Google search reveals that in 2017, chinabuses.org referred to Microvast as “the leading battery manufacturer in China.”

When Microvast was formed in 2006, a subsidiary entity (Microvast Power Systems) was simultaneously incorporated in Huzhou, China. Wu Yang, Microvast’s chairman and CEO, was previously CEO of the Chinese water purification entity OMEX in Shanghai. More than two-thirds of the company’s revenue is generated in China, where more than 80 percent of its assets are located. Microvast’s own SEC filings lay out the risk to its manufacturing assets in China. In addition, any company with such significant Chinese exposure is subject to Beijing’s policies that mandate technology transfers to the state.

Surely, the Biden administration knows Microvast is a PRC front. But it appears to consider it imperative to transition American energy to renewables and recognizes that domestically produced components are too expensive to be practical. The administration thus views the long-term risks of doing business with companies like Microvast as acceptable collateral damage.

Not everyone agrees. The Microvast grant (among others) has rightly attracted Congressional attention, and Energy Secretary Jennifer Grandholm’s upcoming annual budget testimony will be an excellent opportunity to question her on the topic. But, clearly, Congress must do more than simply ask questions.

Microvast received the grant under the 2021 Infrastructure Investment and Jobs Act. While the law urges the Energy Department to focus on actual U.S. companies, Congress needs to make the prohibition against giving grants to Chinese entities explicit. Doing so should be a top priority for the 118th Congress.

If companies like Microvast wish to receive U.S. government contracts and subsidies, they should divest Chinese entanglements and submit a clean bill of health to the Energy Department before they receive the funding. The Biden administration should not be in the business of trying to tempt the company away from China with handouts, no matter how desperately it desires cheap lithium batteries. If the Department of Energy cannot do this on its own initiative, as appears to be the case, Congress should require it to certify that no recipients of grants or subsidies have any ties to the PRC.

This needs to happen now because Microvast is hardly an isolated case. Vast sums authorized under both the infrastructure package and the so-called Inflation Reduction Act continue to flow through the Energy Department and other federal agencies. Microvast may well be just a minor actor in a massive Chinese operation to both subvert these funds and control the renewable energy sources the Biden administration is determined to impose on the United States, in effect transforming America from a global energy superpower into a supplicant to the PRC.

Indeed, the whole premise that the nation must switch over to less reliable renewable energy (and become more dependent on China) to combat climate change should now be called into question. Grandholm has announced that the Lawrence Livermore National Laboratory has made a material breakthrough on nuclear fusion technology. This advancement opens up the possibility of a new energy source that creates no emissions or toxic waste and requires a much smaller footprint than fossil fuels.

Bringing fusion to the scale necessary for it to be a significant clean energy source will take decades. But we would do far better to focus on developing this technology in conjunction with our allies, especially the United Kingdom, while we fuel our immediate future with our own increasingly clean fossil fuels and existing nuclear fission technology. Such a strategy could continue to lower emissions, allow us to retain energy reliability, and avoid leaving our energy security at the mercy of the PRC and its subsidiaries, starting with Microvast.

Victoria Coates is a senior research fellow specializing in national security and international affairs at The Heritage Foundation.

Image: Flickr/White House.