The "45X" credit is targeted by the tax bill introduced by Republicans. It is a tax measure inherited from Joe Biden that allows manufacturers to deduct part of their investments in solar, wind, and critical mineral projects.
The US right wing is targeting credits granted to renewable energy projects. The Freedom Caucus, a group of ultra-conservative lawmakers, has denounced a "Green New Scam." The problem is that these credits were a valuable source of support for the US critical minerals industry. Some Republican lawmakers even admitted to voting for the bill without realizing that this sector was affected.
A threat to a strategic industry
The withdrawal of the credit would have serious consequences. "The tax credit just adds a phenomenal boost to the profitability of a project and gives us advantages that China already gives to its own companies," said Alex Grant, CEO of Magrathea, a start-up specializing in magnesium. China controls most of the world's production of this metal, which is used in steel and aluminum alloys.
"Without this credit, many US producers are at risk of closing," warns KaLeigh Long, founder of Westwin Elements, which is building the country's only nickel refinery.
A risky dependence on China
Critical minerals are at the heart of the energy transition. The sector is concentrated among a few major players, with China dominating. The IEA recently warned of a potential supply shock in some of these markets.
China supplies 60% of the world's rare earths and 90% of the magnets derived from them, which are essential for electric motors and defense, amongst other things.
Beijing has turned its resources into a geopolitical weapon. Tighter controls on rare earth exports to the US have disrupted production chains and highlighted dependence on Chinese mining. This gives Beijing yet another weapon in its tariff negotiations.
Flaws to be corrected, not eliminated
The "45X" credit has been criticized for indirectly benefiting certain Chinese companies through joint ventures or technology transfers. A targeted reform explicitly excluding these entities would have been sufficient. Completely eliminating the credit would further weaken US mineral sovereignty.
Since 2022, this credit has generated $77bn in investment in batteries, $25bn in solar and wind power, but only $6bn in critical minerals. This is easily explained by the fact that only mineral processing was covered by the credit, not extraction, which is the most costly part. Since October 2024, the US Treasury has extended aid to extraction and materials.
Trump, who has signed several executive orders to boost domestic mining production, has not commented on the "45X" credit.
