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Energy Department cancels $200M grant to battery maker after GOP criticizes alleged ties to China

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WASHINGTON (AP) – The Biden administration has scrapped plans to award a $200 million grant to a US battery maker amid criticism from Republican lawmakers over the company’s alleged ties to China.

Texas-based MicroVast was one of 20 companies to win a $2.8 billion seed grant to boost domestic manufacturing of batteries for electric vehicles. The company is building a battery plant in Tennessee and is in talks with the Department of Energy for a $200 million grant funded through a 2021 infrastructure law.

A spokeswoman for Energy Secretary Jennifer Granholm confirmed Tuesday that talks with MicroVast had been cancelled, but did not give a specific reason.

The Department of Energy said in a statement that it “maintains a rigorous review process before releasing any awarded funds, and it is not uncommon for entities that have chosen to participate in award negotiations” to ultimately receive a federal grant. should be denied.

“The department can confirm that it has decided to cancel negotiations and not to award the MicroVast Fund with this competitive funding opportunity,” spokeswoman Charisma Troiano said.

The company did not immediately respond to a request for comment.

Republicans and Democrats applauded the department’s decision.

“This is a win for taxpayers and American businesses,” House Science Committee Chairman Frank Lucas, R-Oklahoma, said in a statement. “In no way should our tax dollars be funding a company with substantial ties to the Chinese Communist Party. These funds are intended to strengthen America’s battery production and supply chain, not China’s hold on these supplies.

Lucas and other Republicans said they were disappointed that it took the Biden administration “more than six months to come to such a clear conclusion.” Lucas and other GOP lawmakers have repeatedly complained about what they say is Microwast’s ties to the Chinese Communist Party.

Rep. Frank Pallone of New Jersey, the top Democrat on the House Energy and Commerce Committee, said the decision to revoke the grant “shows the DOE is taking the management of taxpayer money very seriously.”

At a Senate Energy Committee hearing in February, Sen. John Barrasso, R-Vio., questioned whether the planned grant to MicroVast would benefit China. Barrasso cited a company filing with the Securities and Exchange Commission in which Microvast said it may not be able to protect its intellectual property rights in China.

China often requires foreign companies to partner with Chinese businesses in order to operate in the country.

In a May 1 letter to Granholm, Barrasso said that MicroVast’s CEO “boasted in front of the Chinese media about MicroVast’s strong ties with the People’s Republic of China.”

Barrasso said the 2021 infrastructure law was “intended to develop a strong domestic manufacturing base and supply chain for electric vehicles and other clean energy”. “The DOE’s distribution of $200 million in taxpayer funds to a company that is joined at the hip with China” would be “clearly antithetical to the intent of the bipartisan infrastructure law,” he said.

Barrasso called the MicroVast grant an example of “Solyndra syndrome”, a reference to an Obama-era program that disbursed more than $500 million in loan guarantees to the failed solar company Solyndra. He and other Republicans said both cases demonstrated poor vetting by Democratic administrations.

The loan program largely went dormant under President Donald Trump but has been revived by President Joe Biden. This is separate from the Infrastructure Law funding that was conditionally given to MicroVast and other companies.

The grant, announced in October, was aimed at helping US companies extract and process lithium, graphite and other battery materials. The Biden administration is seeking to boost the production and sales of electric vehicles as a key part of Biden’s strategy to slow climate change and build up American manufacturing.

“It’s critically important, because the future of vehicles is electric,” Biden said at a White House event last year. Biden said the Energy Department grant — along with other spending approved in the 2022 climate law — is a bid “to make sure we’re back in the (battery production) game in a big way.”