Last Monday, the Biden administration announced a temporary two-year pause on imposing new tariffs on solar imports with the aim of reviving the industry which has suffered due to high tariffs.
More recently, US solar installers reported that many of their projects had been blocked following an ongoing investigation by the US Department of Commerce in trade violations by Chinese solar manufacturers who are accused of trying to circumvent current tariffs by moving their production to other Southeast Asian countries and exporting to the United States from there, and not directly from China.
The decision to suspend the new solar tariffs came after complaints from U.S. solar importers, alongside officials advocating for the solar transition, that the new tariffs the investigation may lead to will lead to shortages. of materials, threatening the country’s clean energy transition.
The Survey: Why America’s Solar Industry Needs a Revival
In March, the Commerce Department accepted a request for investigation from Auxin Solar, a small California-based solar panel producer, saying several Southeast Asian-based solar panel makers were using other companies as a front. to evade US tariffs put in place for Chinese companies – tariffs imposed to encourage US manufacturing.
China has now come to dominate the global solar manufacturing market in part by subsidizing factories so they can produce their products and sell them at significantly lower costs.
Low costs have pushed U.S. solar companies to buy these cheaper Chinese-made products, which has had a negative effect on domestic production. As a result, in 2011 the United States imposed tariffs on Chinese products to counter subsidies and unfairly low priced products, as well as to level the playing field.
Since then, China has been accused of setting up new solar panel manufacturing plants in Southeast Asia and exporting products to the United States in an effort to evade those tariffs, which is being investigated. currently the Department of Commerce.
Investigators are currently looking for manufacturers in Malaysia, Thailand, Vietnam and Cambodia in particular as part of these Chinese fronts.
Following months, if not years, of Chinese companies breaking US trade law, US solar companies have been unable to compete, leaving the US industry crippled and in decline.
In 2020, 89% of solar modules used in the United States were importedSoutheast Asian countries representing the bulk of shipments — a great dependence on these exports which now weigh on the future of solar energy.
Many argue that this investigation, while necessary to enforce US law, is potentially dangerous for the solar industry because of this reliance on low-cost products from China. Already, several solar energy companies have remarked that they are looking for new manufacturers as the investigation leads to an uncertain future for solar panel pricing. This has led to the blocking of many solar projects across the United States that were scheduled to be completed by the end of 2022.
NextEra Energy, one of the nation’s largest renewable energy companies, had said it planned to delay the installation of two to three gigawatts of solar building and storage due to business inquiry inquiries – which is enough energy to power over one million homes.
The ongoing investigation has also led to criticism from the Solar Energy Industries Association (SEIA) for containing several members of Chinese solar manufacturers who have previously been accused of violating US tariffs. These “member companies” include Jinko Solar, JA Solar and Trina Solar, as well as Hanwha Q Cells, a company headquartered in Korea but manufacturing in China.
Many have claimed that the SEIA allows these particular Chinese companies to participate in the association because they are heavily funded by them – people even going so far as to say that the SEIA criticizes the investigation as a means of interfering with she.
“SEIA is working day and night to discredit and undermine this investigation, as the Commerce Department watches their businesses, their members,” said Nick Lacovella, of the bipartisan trade reform organization, the Coalition for a Prosperous America said. “I don’t know how clearer it gets. Everyone should question their motives here.
Yet Dan Whitten, SEIA’s vice president of public affairs, says these rumors are false and that SEIA is committed to US solar companies.
“SEIA represents America’s solar and storage industries and American workers, period. Those who suggest otherwise are fundamentally dishonest and acting in bad faith,” Whitten said. said.
Bipartisan voices in Congress have led the charge to ensure that US trade policy allows clean energy deployment to thrive and creates a bridge to expand domestic manufacturing. @SenJackyRosen explains what President Biden #solar proclamation means for the clean energy economy: pic.twitter.com/7jaNXnLMtk
— Solar industry (@SEIA) June 8, 2022
Biden suspends tariffs on solar panels so their industry can rebound, but sparks controversy
Early last week, the Biden administration announced a temporary two-year pause on solar panel tariffs in an effort to allow Commerce’s investigation to continue (most likely finding Chinese companies guilty) without negatively affect the US solar industry.
The pause is also aimed at ensuring businesses have access to a sufficient and cheap supply of solar panels – especially as the United States faces its highest levels of inflation since the 1980s – and to put back back on track the stalled solar projects (which happened as a result of the trade investigation).
Essentially, Biden is trying to revamp the solar panel market, but the policy changes aren’t just a flick of the switch.
By limiting tariffs, Biden is also ignoring the wishes of domestic solar manufacturers, who argue that the solution to reviving the U.S. solar industry lies in the opposite measure: tougher barriers on low-cost imports.
The tariff break, they say, “could undermine trade laws designed to protect American workers by allowing companies in China to continue to flood the United States with cheap imports.”
Provided the investigation finds Chinese solar companies guilty of trade violations, Biden’s decision to suspend tariffs would see them avoid accountability for at least two years. The pause will, in effect, leave Chinese companies momentarily unpunished and further harm American workers over the next two years.
To counter such complaints from national solar energy companies, Biden also announced on Monday that he would enact the Defense Production Act – a law that gives the president the power to accelerate and expand the supply of equipment and services when needed to promote national defense.
Essentially, the law allows Biden to expand powers and funding to direct the activity of private companies so he can ramp up American manufacturing to replace cheap Chinese imports.
Putting the law into effect is another way Biden is trying to boost clean energy in general, as many fear the US climate goal of 100% clean energy by 2035 may not be possible. The law will increase domestic production of heat pumps (which provide more efficient heating and cooling), equipment used to make low-emission fuel, and other parts needed to kick-start clean energy in the country.
The controversy continues: Does Biden have the power?
The temporary pause was welcomed by many who have encouraged the White House to intervene in Commerce’s investigation for some time now, but others believe it will lead to a deeper drop in solar power generation. , stalling projects and making panels more expensive.
According The Washington Post, 80% of U.S. solar companies have already said the survey jeopardized at least half of the projects they planned to complete by 2022.
Commerce’s investigation will ultimately lead to targeting manufacturers who break the law with tariffs, rates contemplated by the Department of Commerce may exceed the price of the panels when cold by 50% – making the acquisition of panels in the United States much more expensive.
Others criticized whether the president even had the power to implement the Defense Protection Act in this circumstance – a law that allows the US president to “declare that an emergency exists due to ‘a state of war or otherwise’, and to subsequently import – duty-free – “food, clothing and medical, surgical and other supplies for use in emergency relief operations” during the situation emergency.
Some people, like Auxin Solar CEO Mamun Rashid, say the tariff break and the Defense Protection Act interfere with business investigation which is crucial to enforcing US law.
“President Biden is significantly interfering with the quasi-judicial Commerce process,” says a statement from Rashid. “By taking this unprecedented – and potentially illegal – step, he opened the door to special interests funded by China to thwart the fair application of US trade law.
The decision to suspend tariffs on solar panels and Commerce’s ongoing investigation appear to be controversial as people try to balance the benefits and harms this will have on the solar industry.
Biden’s decision leaves Chinese companies irresponsible for another two years and opens up an uncertain future for solar projects, especially as many have had to stall their projects due to the manufacturing transition.
Yet, by doing nothing, the United States would continue (1) the tendency of American companies to depend on foreign exports and (2) develop an increased dependence on fossil fuels – especially as the chances of meeting climate goals of administering 100% clean energy by 2035 seem to be getting smaller and smaller.
For now, Biden’s actions seem like a bridge to a clean energy future, but one that could crumble under too much pressure.
Editor’s note: The opinions expressed here by Impakter.com columnists are their own, not those of Impakter.com –In the featured photo: Solar power farm as part of the Desert Renewable Energy Conservation Plan in the California desert on September 20, 2016. Source: Land Development Office, Flickr.