Solar Power Industry Hails Biden 2-Year Pause On Solar Panel Tariffs
Some people complain that politics has no place on the pages of CleanTechnica. Those people are wrong. Politics has everything to do with technology and clean energy, and the latest kerfluffle over solar panel tariffs proves it. Pretty much everyone except Despicable Joe Manchin understands that free solar power from the sun is preferable to spewing millions of tons of carbon dioxide into the atmosphere so generate electricity.
But what if companies in one country, China, are subsidized by their government so the can make products like solar panels cheaper than companies in another country, the US, where no such government subsidies exist? Is that fair? Of course not. That’s the position of Auxin Solar, a solar panel manufacturer based in San Jose, California.
Canary Media reports that earlier this year, Auxin filed a petition with the US Commerce Department claiming Chinese companies are dodging the US tariffs initially imposed by the Obama administration on Chinese and Taiwanese solar cells and modules by building them in Cambodia, Malaysia, Thailand, and Vietnam while still using Chinese made polysilicon wafers and other materials, as well as Chinese intellectual property.
Mamun Rashid, co-founder and CEO of Auxin Solar, said in an email: “For years, Chinese solar producers have refused to fairly price their products in the U.S. and have gone to significant lengths to continue undercutting American manufacturers and workers by establishing circumventing operations in countries not covered by those duties.”
The Commerce Department opened an investigation, which is due to be concluded in August. Its findings will be incorporated into its tariff schedules beginning in 2023. But here’s the thing. Auxin says US companies are loading up on those imported panels as a hedge against higher prices later (which is what any well managed company would do under normal business circumstances). It wants any relief granted by the Commerce Department in the form of higher tariffs to be retroactive, so it would apply to those current imports as well as future imports.
The result of all this is that the solar industry in the United States has ground to a halt while everyone holds their breath, waiting for the Commerce Department’s decision. Chinese solar manufacturer Trina Solar took to Twitter to say, “In just one week, the Biden admin’s tariff case has stopped solar panel supply in the U.S. The industry urges [the Commerce Department] to end this disastrous investigation before its [clean energy] agenda is put out of reach.” Solar Energy Industries Association CEO Abby Hopper said in a statement that the investigation has unleashed an “existential crisis” in the U.S. solar industry.
Here’s the dilemma for the Biden administration. On one hand, it wants to push renewable energy, including solar power and wind power, forward as fast as possible to help America meet its carbon reduction goals. “We can’t battle climate change without imports,” as Matthew Nicely, a partner at lobbying firm Akin Gump, said in testimony before the U.S. Trade Representative in January. On the other hand, it wants to protect domestic manufacturers from unfair competition from manufacturers in other countries.
Looking at the larger picture, only 14% of U.S. solar workers were employed in manufacturing. A far larger share of the solar workforce — 67% — were in solar installation and development, according to the most recent National Solar Jobs Census.
Auxin Solar is a manufacturer of solar panels founded in 2008. Sherry Tai is co-founder, along with Mamun Rashid. Its 100,000-square-foot facility hosts 150 megawatts of annual manufacturing capacity. (By comparison, major Chinese solar factories have module production capacities up to 50 gigawatts). According to the company, it has a staff of 35 employees. Online estimates put the company’s annual revenue at around $9.7 million.
This relatively minuscule scale and capacity put Auxin firmly in the category of artisanal solar boutique — not even a minor player when it comes to utility scale solar, Canary Media says. The SEIA’s Hopper says, “No domestic supplier [with only]…150 megawatts of capacity to make bifacial solar panels would even be allowed to bid on a utility project.”
But current US trade law process allows a $10 million, 150-megawatt-capacity company like Auxin to shut down a $10 billion, 20-gigawatt solar industry just by submitting a basic petition — ostensibly in the interest of fostering a homegrown solar manufacturing industry.
Canary Media contributor Eric Wesoff drove out to the company headquarters to see what he could see. Here’s what he found when he got there. “I stopped by the factory site in San Jose a couple of times over the course of several weekdays. I counted 12 to 20 cars in the parking lot of the rundown industrial building. The loading dock was overgrown with weeds and a stack of weathered wooden pallets sat at the far end of the lot.” For this the entire US grid scale solar industry is being put on hold?
Biden Plan To Rescue Solar Power
The Biden administration is between a rock and a hard place. It can’t be seen to be weak on China or as opposing its own Commerce Department. It also can’t allow tiny Auxin Solar to cause the whole renewable industry to implode. This week, it announced it is imposing a 2-year moratorium on tariffs for solar panels from Cambodia, Malaysia, Thailand, and Vietnam.
Sources tell Reuters the move is intended to relieve concerns about having to hold billions of dollars in reserves to pay potential tariffs. “There is going to be this safe harbor timeout on the … collection of duties, and that’s at the heart of what’s going to save all of these solar projects and ensure that they are going forward,” the source said. Biden also will invoke the Defense Production Act to drive US manufacturing of solar panels and other clean energy technologies in the future, with the support of loans and grants, the sources said.
Tariffs could still be levied on panels imported after the 24-month “safe harbor” period but the threat of retroactive payments would be off the table, the source added. “If you bring the stuff in during that 24-month period, regardless of the outcome of the investigation, there will not be those additional duties,” a second source told Reuters.
“It is a tool to do what we obviously desperately need to do, which is rapidly grow the domestic manufacturing capacity of solar panels,” that second source said, adding that the administration is “very focused on making sure there’s reliable and resilient supply chains at this critical moment for our energy sector, for our ability to support our consumers and to tackle the climate crisis.”
The Roots Of The Crisis
As in all things, the beginnings of this crisis are rooted in history. For 50 years, the United States has been the primary advocate for a global economy, one that permits poor people in Bangladesh to make clothing for its citizens or starving children in the DRC to mine for cobalt. Former president George W. Bush correctly asserted that there are some jobs Americans just won’t do, and under the umbrella of neoliberal capitalism, they didn’t have to, because there was always a ready supply of people around the world who were only to willing to work for meager wages.
We told ourselves we were lifting all of them out of poverty by allowing them to make goods for Walmart and Amazon, but what we were really doing was hollowing out America’s industrial might by making it possible for corporations to outsource and offshore there manufacturing capabilities.
Covid exploded the myth that raw materials and finished products could come from anywhere on Earth where the cost of production is cheapest. All the concerns we hear about “supply chain issues” are just a nice way of saying that globalization has bitten us in the buttocks — hard.
Republicans clapped their hands in glee when the Obama administration loaned money to Solyndra in a bid to jumpstart US solar panel manufacturing. As a result, making solar panels domestically never really got started and so today, America has no choice but to look overseas for the products it needs to meet its carbon reduction targets.
The takeaway here is that we as a nation have sat back and allowed China to establish a commanding lead in solar manufacturing, electric vehicles, battery manufacturing, and electronics. While we are parading about and slapping each other on the back with the words “America First” on our lips, the reality is that America is near the bottom of the world’s nations in industrial capacity, something we have willingly — even gleefully — done to ourselves.
Canary Media puts it this way: “With or without tariffs, the U.S. solar industry is unlikely to regain its production mojo anytime soon. U.S. solar manufacturers have largely lost out to China in the race for global market domination. Wood Mackenzie’s latest findings indicate that the U.S. currently has a meager 7.5 gigawatts of PV module production out of a global capacity of nearly 400 gigawatts.”
The tragedy here is that we have willingly done this to ourselves. A country that depends almost exclusively on other nations for the goods it needs to survive can hardly claim to be world leader. It’s time to wake up — while there’s still time.
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