Yellen Hears Criticism of IRA Implementation, Says Treasury Working ‘Tirelessly’ to Issue Regs
The Treasury Department is working “24/7” to implement tax credit regulations and guidance under the Inflation Reduction Act, including credits that would support the domestic solar industry and help the U.S. reduce reliance on Chinese imports, Treasury Secretary Janet Yellen told the Senate Finance Committee this week. Yellen’s comments came as lawmakers expressed frustration with the implementation process, with at least one senator criticizing its approach to critical minerals.
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Yellen, speaking during a March 16 Senate Finance Committee hearing, said the agency is working through “numerous regulations to implement the IRA programs, from prevailing wage and apprenticeships, to electric vehicles and advanced electric energy projects.” She also said the agency is working on IRA guidance to help the U.S. “make sure that we reduce our dependence on China and have a strong domestic capacity.”
“All I can say is that we are working 24/7 on the guidance and regulations that need to be written in order to implement the various tax credits that are in the IRA,” Yellen said. “We have no higher priority at Treasury, and we are really working tirelessly to get this done.”
Several lawmakers said Treasury needs to move faster. “There is a lot of money that can be doled out,” said Sen. Marsha Blackburn, R-Tenn., but Treasury needs to “issue guidance that hasn't come. So there's a lot of confusion there.”
Sen. Ron Wyden, D-Ore., chair of the committee, said he has “serious concerns about the administration's approach to implementing” the IRA, including the portion that “deals with sourcing critical minerals.” House lawmakers last week voiced displeasure after Yellen said critical minerals mined or processed in Japan or Europe may be considered as in-bounds for regional value content if those countries reach a critical-minerals-specific trade agreement, which doesn’t necessarily require congressional approval (see 1909260014)
“Free trade agreements cannot be unilaterally decided by the executive branch,” Wyden said, “They require consultation consent from Congress, and that includes any agreement on critical minerals.”
Other senators, including Sen. Sherrod Brown, D-Ohio, urged Yellen to ensure that China’s solar industry won’t be able to “profit” from the IRA’s solar tax credits “without developing a genuine domestic supply chain.” But Sen. Catherine Cortez-Masto, D-Nev., said the U.S. will need to continue buying foreign solar products even with the tax credits, saying the domestic solar manufacturing industry is “not there yet.”
“In general, the Inflation Reduction Act and the work that we've been doing to lead us into this clean energy future requires a bridge to get us there,” she said, adding that the U.S. solar manufacturing capacity isn’t large enough to meet demand.
“If we don't get these supplies, if we don't have what we need to address bringing these supplies here from somewhere, and deal with the tariffs that are out there that are limiting our access to these supplies,” Cortez-Masto said, “we are going to be limited to the amount that we can grow our clean energy in this country through solar.”
She said “that's what I would love the administration to keep in mind” as its implementing the IRA. “We want to make sure that we're getting our supplies from countries that we support, that are our friends and our partners, absolutely. But until we grow our domestic manufacturing here, we are not going to meet the demand for solar in this country that we need right now.”
Other lawmakers criticized the Biden administration's handling of the Organisation for Economic Co-operation and Development’s global minimum tax agreement negotiations (see 2212160066 and 2110080051). Sen. Todd Young, R-Ind., said he wanted to voice his “frustration and displeasure of the way the administration has handled the OECD pillar two negotiations.”
“In particular, the pillar two undertaxed profits rule would uniquely disadvantage American workers in job creating businesses by providing our trading partners with a political blessing to tax the U.S. activity of U.S. companies.” He said American businesses “deserve a better deal” and asked Yellen “to go back to the negotiating table and negotiate that deal for them.”