{"id":661983,"date":"2022-05-19T10:30:00","date_gmt":"2022-05-19T10:30:00","guid":{"rendered":"https:\/\/grist.org\/?p=570688"},"modified":"2022-05-19T10:30:00","modified_gmt":"2022-05-19T10:30:00","slug":"how-usa-first-failed-the-solar-industry","status":"publish","type":"post","link":"https:\/\/radiofree.asia\/2022\/05\/19\/how-usa-first-failed-the-solar-industry\/","title":{"rendered":"How \u2018USA-first\u2019 failed the solar industry"},"content":{"rendered":"\n

The economic theory behind solar tariffs is simple: Solar cells and panels made abroad are often cheaper, thanks to lower manufacturing costs and generous government subsidies from countries like China. So taxing imported panels should give the U.S. solar industry a fighting chance at survival. <\/p>\n\n\n\n

At least that has been the thinking over the last 10 years and under three different presidential administrations. There\u2019s just one problem \u2013 the majority of the U.S. solar industry has never supported them, arguing the tariffs have done nothing to bolster domestic production and have actually slowed the pace of decarbonization.<\/p>\n\n\n\n

This contradiction has become abundantly clear over the last two months. In late March, the Biden administration quietly announced plans<\/a> to investigate a complaint from a small solar manufacturer called Auxin Solar, which argued that Chinese firms are circumventing trade restrictions by manufacturing solar panels and cells in Southeast Asia.  <\/p>\n\n\n\n

The response from the U.S. solar industry was swift. Trade groups called the investigation a \u201cdisaster<\/a>,\u201d \u201cdevastating<\/a>,\u201d and a move that would \u201ceffectively freeze\u201d solar development at a time when more renewable energy sources are desperately needed. Eighty percent of the solar panels imported into the U.S. come from Cambodia, Malaysia, Vietnam, and Thailand. If the investigation supports Auxin\u2019s complaint, those countries would be subject to additional tariffs on imports to the U.S. Earlier this month, a bipartisan group of 22 senators sent a letter<\/a> urging President Joe Biden to quickly issue a preliminary finding, or risk \u201cmassive disruption\u201d to solar companies unsure if prices for panels are about to skyrocket. <\/p>\n\n\n\n

Some negative consequences from the investigation have already come to pass. Two weeks ago, an Indiana utility<\/a> announced that several solar projects had been delayed due to the upheaval in the market, and that as a result, two coal-fired power plants will now stay open until 2025, instead of 2023. The Solar Energy Industries Association, a trade group, estimates that 81 percent of solar installers in the U.S. have seen shipments canceled or delayed<\/a>. According to an analysis<\/a> from the Oslo-based energy research firm Rystad, the U.S. was estimated to install around 27 gigawatts of solar capacity in 2022; now, that number could be as low as 10 gigawatts. <\/p>\n\n\n\n

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Workers install solar panels on a home in Palmetto Bay, Florida in 2018. Joe Raedle\/Getty Images<\/cite><\/figcaption><\/div><\/figure>\n\n\n\n

But the Auxin case is only the latest event to raise questions about the effectiveness of solar tariffs. The U.S. has multiple layers of overlapping tariffs on solar panels manufactured in China, Southeast Asia, and most other foreign countries. At the same time, 86 percent<\/a> of American solar jobs are in installing panels, not creating them. If tariffs increase the cost of the technology, they could slow growth and increase costs for the rest of the industry. Many analysts argue that tariffs are responsible for U.S. solar prices being 43 to 57 percent<\/a> higher than the global average.  <\/p>\n\n\n\n

President Biden has promised to cut emissions by 50 percent over the next eight years. That move would require an increase in solar capacity of 10 percent<\/a> every year<\/em>. If Biden \u2014 and the rest of the U.S. \u2014 is serious about addressing climate change, are tariffs really the best option? And if not, can anything be done about them?<\/p>\n\n\n\n

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To understand U.S. solar tariffs, you first have to understand the essential components of solar panels. Panels are made in four essential steps<\/a>. First, chunks of polysilicone are melted at high temperatures into heavy, cylindrical blocks, or ingots; the ingots are sliced into thin sheets, called \u201cwafers\u201d; the wafers are then embellished with phosphorus and semiconductors to make solar cells. Finally, the cells are soldered together to make \u201cmodules\u201d \u2014 better known as solar panels.<\/p>\n\n\n\n

American scientists invented the solar cell<\/a>, and for many years the U.S. was a leader in manufacturing cells and solar panels. But in the 2000s, China, in an attempt to secure energy independence<\/a> and dominate the renewable energy market, began to accelerate its solar industry, ramping up production of polysilicone<\/a> and taking control of every level of its solar supply chain. (The country was also accused of providing unfair subsidies<\/a> and utilizing forced labor<\/a>.) Prices for panels dropped precipitously. By the time the U.S. instituted its first set of tariffs<\/a> on imported panels and cells from China in 2012, during Obama\u2019s presidency, domestic manufacturing had already plummeted<\/a>, and some American producers had been forced out of the market. The solar start-up Solyndra<\/a>, for example, went bankrupt in 2011. Installations, however, soared, thanks to the low-cost technology available abroad. <\/p>\n\n\n\n

The 2012 tariffs were aimed specifically at China, then later expanded to include Taiwan. So-called \u201canti-dumping and countervailing duties\u201d tariffs, they were intended to counteract the effects of Chinese subsidies for the solar industry. According to a decades-old trade law \u2014 the Tariff Act of 1930 \u2014 the U.S. is legally obligated to impose tariffs if there is evidence of unfair subsidies by foreign countries. \u201cChina is effectively a non-market economy,\u201d said William Reinsch, a senior adviser at the Center for Strategic and International Studies, or CSIS, in Washington, D.C. \u201cThe concept is that you offset the harm that has been done.\u201d<\/p>\n\n\n\n

When President Donald Trump was in the White House (and waging a trade war with China), another set of tariffs<\/a> was added \u2014 this time on imports of cells and modules from a much longer list of countries<\/a>, including many in Southeast Asia. These \u201csafeguard\u201d tariffs were intended to step down every year until 2022; but in January, President Biden extended them for four more years, with a few key exemptions<\/a>. <\/p>\n\n\n\n

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President Donald Trump holds up a Section 201 action issuing tariffs on imported solar panels and washing machines in January 2018. Mike Theiler-Pool\/Getty Images<\/cite><\/figcaption><\/div><\/figure>\n\n\n\n

All these tariffs should be helping to boost solar manufacturing in the U.S., but many solar and trade experts claim they are doing nothing of the sort. \u201cTariffs have had no impact on creating solar manufacturing,\u201d said Pol Lezcano, the lead North America solar analyst for BloombergNEF, a New York City-based energy research firm. \u201cThe only thing the tariffs have accomplished is to really bring costs up for everybody else.\u201d According to the International Renewable Energy Agency<\/a>, the cost of installing utility-scale solar in the U.S. is among the highest in the world.<\/p>\n\n\n\n

Other experts have argued that the tariffs were too little, too late. Varun Sivaram, a former senior research scholar at Columbia University and current member of the Biden administration, argued in 2018<\/a> that if a tax on imports had been put into place earlier than 2012, it could have helped \u201clevel the playing field.\u201d \u201cBut if Obama\u2019s tariffs closed the barn door after the horse bolted,\u201d he wrote, \u201cthen Trump\u2019s [2018] tariffs amount to putting a lock on the door.\u201d<\/p>\n\n\n

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