A closer look at the clash in Georgia over green energy tax breaks

Views of a Rivian electric vehicle parked in front of the Georgia State Capitol for the first ever Rivian Day on Wednesday, March 1, 2023. (Natrice Miller/ Natrice.miller@ajc.com)

Credit: Natrice Miller / Natrice.Miller@ajc.com

Credit: Natrice Miller / Natrice.Miller@ajc.com

Views of a Rivian electric vehicle parked in front of the Georgia State Capitol for the first ever Rivian Day on Wednesday, March 1, 2023. (Natrice Miller/ Natrice.miller@ajc.com)

In a political clash that could have far-reaching consequences, senior Republicans have pressed to repeal lucrative clean energy incentives that have fueled a spate of investments in Georgia that U.S. Sen. Jon Ossoff and other Democrats warn could be jeopardized by cuts.

House Speaker Kevin McCarthy’s proposed rollback of tax breaks designed to curb climate change are part of a broader GOP effort to paint the Democratic-backed Inflation Reduction Act as an expensive government giveaway.

It also puts Gov. Brian Kemp in a tricky position. The second-term Republican, who last year blasted the law as a “reckless tax and spending spree,” has helped recruit multibillion-dollar electric-vehicle plants and massive alternative energy projects to the state that will benefit from the federal incentives embedded in the law.

Instead of echoing McCarthy’s call to roll back the incentives last week, Kemp hammered Ossoff and U.S. Sen. Raphael Warnock over a provision of the law that allows only electric vehicles assembled in the U.S. to qualify for a $7,500 customer tax break.

Since Hyundai’s $5.5 billion “Metaplant” near Savannah won’t be operational until 2025, the company’s customers could lose out on breaks that go to other automakers already up and running in the U.S.

Kemp told The Atlanta Journal-Constitution on Wednesday that he backs a repeal of the overall law, which he said “never should have passed to start with.” But he said President Joe Biden should at least tweak regulations to allow Hyundai and other manufacturers with projects underway to benefit from the breaks.

“We’ve been trying to bring these high-quality, high-innovation manufacturing jobs back to the United States. That’s what President Biden campaigned on,” Kemp said. “Now he’s penalized those companies, and he’s picking winners and losers with the bill he passed.”

Gov. Brian Kemp, center right, announces that South Korean automaker Hyundai Motor Group is building an electric-vehicle plant in Ellabell, near Savannah. The Republican has hammered Georgia's two Democratic U.S. senators, Jon Ossoff and Raphael Warnock, over a provision of the climate and health care bill that Congress passed last year because it only provides a tax break to customers for electric vehicles assembled in the U.S. The Hyundai “Metaplant” won't be operational until 2025, so the tax break won't apply to its vehicles until then. (AJC Photo/Stephen B. Morton)

Credit: Stephen B. Morton for The Atlanta Journal-Constitution

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Credit: Stephen B. Morton for The Atlanta Journal-Constitution

Hyundai executives, who felt blindsided by the law, have also voiced frustration as sales have slowed. So did South Korea’s ambassador to the U.S., who said at the groundbreaking of the coastal Georgia plant that his country is “at risk of being disadvantaged” before an audience that included Ossoff and Warnock.

In an interview, Ossoff took a different approach. He said both parties should rejoice over clean energy incentives that have made Georgia a growing hub for green projects. And he said Hyundai can take advantage of the breaks as soon as it begins production of the vehicles in Georgia.

“Georgia has benefited more than just about any other state in the country from these manufacturing incentives,” Ossoff said. “We should be celebrating that rather than politicizing it, because Georgia’s economic development should be a team sport and not a political contest.”

Vice President Kamala Harris toured the Qcells factory in Dalton earlier this month to promote the Biden administration’s investments in American manufacturing. Qcells has credited health and climate law that Democrats pushed through Congress last year with making the expansion possible, while also thanking Gov. Brian Kemp’s office for lucrative tax incentives and workforce programs. (Natrice Miller/natrice.miller@ajc.com)

Credit: Natrice Miller / Natrice.Miller@ajc.com

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Credit: Natrice Miller / Natrice.Miller@ajc.com

With every major green energy announcement in Georgia, the partisan tension over the federal incentives is on display.

When Qcells announced a $2.5 billion expansion in Dalton, for instance, Kemp trumpeted the investment as vindication of his economic policies. Vice President Kamala Harris touted it as a benefit of the administration’s health and climate law. A top Qcells executive, meanwhile, pointedly credited both Kemp and the Biden administration.

Ossoff and Kemp’s diverging views on the incentives could offer an early glimpse of a key divide in a potential 2026 race between the two rivals. The debate also holds greater implications for Georgia’s efforts to emerge as a national leader in the transition away from fossil fuels.

U.S. Sen. Jon Ossoff said Georgia is benefiting from green energy incentives in the Inflation Reduction Act "as much or more than any state in the country. (Natrice Miller/natrice.miller@ajc.com)

Credit: Natrice Miller / Natrice.Miller@ajc.com

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Credit: Natrice Miller / Natrice.Miller@ajc.com

Excerpts of the interview with Ossoff:

On GOP calls to repeal the incentives:

“I’m not sure why the elected officials in Georgia, whether it’s the governor or my House colleagues, would choose to politicize policies that are delivering so much benefit for the state. Georgia is benefiting as much or more than any state in the country from these manufacturing incentives. We’re in the midst of a manufacturing boom, driven in large part by the incentives in the (Inflation Reduction Act). There is enough credit to go around, so I don’t know why the governor and some members of Congress want to make this political.”

On Kemp’s criticism of the law:

“As for the governor’s specific criticism, he’s misreading the law. As soon as Hyundai is producing electric vehicles in Georgia, they can qualify for the manufacturing incentives. And I’m sure my team would be happy to brief his if he isn’t fully understanding it.”

On whether the Inflation Reduction Act set the stage for a green surge in Georgia:

“Solar manufacturing expansions are already underway. Battery production facility expansions are ongoing and planned. The acceleration of EV manufacturing construction in Georgia. All of this is directly supported by the manufacturing incentives in the IRA. Georgia has benefited more than just about any other state in the country from these manufacturing incentives. We should be celebrating that rather than politicizing it, because Georgia’s economic development should be a team sport and not a political contest.”

Georgia House Speaker Jon Burns, from left, Gov. Brian Kemp and Rivian CEO R.J. Scaringe look inside of the trunk of a Rivian electric vehicle following a press conference celebrating the first-ever Rivian Day at the Georgia State Capitol on March 1. Kemp said an argument couljd be made that green energy incentives in the Inflation Reduction Act aren't needed. "I personally think (the Biden administration is) trying to push the market too quick, which I hope doesn’t backfire on them. I just feel like it’s driven up costs, inflation and a run on rare metals." (Natrice Miller/ Natrice.miller@ajc.com)

Credit: Natrice Miller / Natrice.Miller@ajc.com

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Credit: Natrice Miller / Natrice.Miller@ajc.com

Excerpts of the interview with Kemp:

On whether he sees the federal green incentives as a boon or as a driver for inflation:

“I think it has helped fuel inflation. Especially when you look at the market that was developing long before the IRA passed. You could make the argument that there wasn’t even a need for this. I personally think they’re trying to push the market too quick, which I hope doesn’t backfire on them. I just feel like it’s driven up costs, inflation and a run on rare metals. …

“You can make the point that this wasn’t even needed. The market was already driving toward this in 2019 and 2020, before IRA even passed. Regardless, this legislation is picking winners and losers. It’s not fair to Georgia-based companies and companies that are investing in Georgia.”

On what Congress and the Biden administration should do:

“There’s two ways to level the playing field in my opinion. You can either repeal the whole thing and put everyone on a level playing field, but if you’re not going to do that — and I don’t expect them to do that — you simply need to make it fair for everyone. So that companies that are building and producing these vehicles in the United States — or will be — are not at a disadvantage.”

On which option he prefers:

“I never thought it should have passed to start with, because I felt like the market was already developing here and I don’t think it should be incentivized …

“The demand is out there, it’s what a lot of consumers want. We should let that market work. But I’m not in Washington, D.C. All I’m saying is that people in Washington don’t need to be picking winners and losers. They need to level the playing field in a way that helps all the manufacturers.”

On implications in the 2024 race:

“This is going to be a liability for the president. I’ve been talking about this, and it’s simply a fairness issue. And it’s something they need to fix. And if they don’t, it’s going to be a great talking point for me and others talking about how Joe Biden is picking winners and losers.”

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