Another Solyndra? Biden faces solar tariff test

Source: By David Iaconangelo, E&E News reporter • Posted: Sunday, November 22, 2020

The incoming presidency of Joe Biden is raising questions about the fate of President Trump’s solar tariffs and whether they should be — or are likely to be — repealed.

According to the Solar Energy Industries Association, repealing the tariffs should be a top priority for Biden, even as a nascent field of U.S. manufacturers warns that it would pose an “existential threat” and raise the possibility of political blowback.

The first of the solar tariffs in question was imposed in 2018 by Trump, who slapped a 30% tax on panels and cells brought in from outside the United States. A second tariff enacted that same year took more direct aim at China, hitting solar equipment from the country with an additional 25% duty.

In a media call this week, SEIA’s representatives listed removing the tariffs as the first of six immediate actions that Biden should take on solar, characterizing them as a misguided way of growing a domestic base of panel and cell manufacturers. The extra taxes on imports have cost the U.S. industry tens of thousands of new jobs and billions of dollars in investment, SEIA said.

“We feel pretty strongly that tariffs are not the way to incentivize manufacturing,” said John Smirnow, SEIA’s general counsel and vice president of market strategy.

Many investment analysts think Biden is likely to accommodate that request.

“Get ready for Biden to cut or even repeal solar tariffs,” wrote Pavel Molchanov, an analyst at Raymond James, in a research note last week.

Biden’s climate agenda, which includes a 100% clean electricity goal by 2035, make it likely that SEIA’s long-standing objections will find a sympathetic ear, he wrote.

In the lead-up to the election, a team of analysts from ClearView Energy Partners made a similar prediction, writing in a late October note that if Biden were to win, “we believe he could revoke President Trump’s solar product tariffs because they raise the cost of greening up the grid.”

And the day after the election, shares in the largest China-based producers of solar products rose. About three-fourths of global panel production comes from Chinese companies, though many have since shifted their facilities to Southeast Asia to skirt the Trump administration’s tariffs.

But some U.S.-based solar manufacturers believe a full repeal of tariffs is far from a foregone conclusion — at least until other, more expansive policies to support domestic manufacturing are in place. They argue that a swift repeal would lead to the collapse of U.S. factories, undermine Biden’s campaign promises of clean energy jobs and leave the administration open to partisan attack.

A spokesperson from one U.S.-based company, who agreed to speak on background, likened the political liabilities involved to that of Solyndra’s bankruptcy under President Obama, adding that the Biden administration would be wary of “inflicting damage on themselves” with a quick repeal. Solyndra received a loan from the Department of Energy before going bankrupt.

Mamun Rashid, president of California-based panel manufacturer Auxin Solar, said a repeal would “pose an existential threat” to companies like his.

“To repeal it would be throwing in the towel on U.S. solar manufacturing. I don’t see what benefit it would bring,” he wrote in an email to E&E News.

At least one member of Biden’s transition team for the Office of the U.S. Trade Representative, which adjudicates tariff policy, also has repeatedly downplayed the severity of Trump’s tariffs on the solar industry. That member, Todd Tucker, is a political scientist and former fellow at the Roosevelt Institute, a progressive think tank.

In one March 2018 op-ed for Politico Magazine, Tucker wrote that anti-dumping duties on solar panels were “commonplace remedies in past administrations, and based on independent agency advice,” adding that Trump’s critics were being “hyperbolic” in their opposition to panel tariffs.

The Biden transition team did not immediately respond to a request for comment.

Trump gets tariff victory

Tariff policy has divided the American solar industry since the Obama administration, with developers pushing for access to low-cost panels and cells from Asia, while U.S. manufacturers cry foul over unfair competition from other countries.

In 2012, trade officials in the Obama administration issued anti-dumping duties on Chinese panels and cells that ranged up to nearly 50%, after determining that they were being unfairly subsidized by China’s government. By then, several U.S.-based panel producers had already shuttered.

Some manufacturers describe the Trump administration’s two tariff actions affecting solar, which came under sections 201 and 301 of a 1974 trade law, as being largely indistinguishable from the Obama duties, at least in terms of what motivated them.

“Those are processes that are bureaucratic, in which there’s no political influence,” said Martin Pochtaruk, president of Heliene Inc., a Canada-based producer of bifacial panels that opened a factory in Minnesota after Trump’s 2018 tariffs.

Trump’s public derisions of solar power and other renewables also have sparked accusations among some of his political opponents that the administration’s tariffs were aimed at frustrating the industry rather than helping grow a domestic supply chain.

One immediate test for Biden involves bifacial panels — a technology that’s increasingly prized by developers, since they can produce power from both sides. That panel type was initially exempted from the Trump administration’s tariffs, because no U.S. company was making them at the time. After Heliene and other companies opened facilities, the administration tried to remove the exemption but violated rulemaking procedures in doing so, according to a federal trade judge (Energywire, Oct. 13).

Yesterday, a U.S. trade judge gave the Trump administration a victory by upholding the president’s October proclamation calling for the removal of a tariff exemption for bifacial panels. The ruling may not be permanent, however, as Judge Gary Katzmann said solar companies supporting the exemption can file a new lawsuit to undo the proclamation.

In a statement yesterday, Smirnow called the decision “baseless” and said SEIA is exploring all legal options, including possibly filing a new action against the proclamation.

With existing tariffs, a federal report this year found that they have been effective at encouraging U.S.-based panel production, although domestic cell-making continued to decline. At least three panel producers have opened new facilities in the United States, and two other companies expanded their existing production, concluded the U.S. International Trade Commission in a February review.

SEIA maintains that as many as 62,000 workers were either laid off or never hired as a result of the tariffs, along with the loss of 10.5 gigawatts of solar capacity and $19 billion in investment.

The association’s 1,000-company membership includes manufacturers in addition to developers, utilities, consultants, installers and others. One of the five panel manufacturers that opened or expanded U.S. factories after Trump’s tariffs, South Korea-based Hanwha Q Cells, sits on SEIA’s board of directors.

But SEIA is angling for an unprecedented expansion of solar’s electricity share — from 3% of the nation’s power at present to 20% by 2030.

That goal will require a much more expansive set of policy supports for U.S. manufacturing, say the group’s representatives, not just a simple tariff on imports. A September white paper on the topic, issued by SEIA, called for “a comprehensive package” of state and federal policies that included manufacturing tax credits, rebates for U.S. equipment production and the creation of a federal green bank.

During Biden’s first 100 days in office, however, they say, they want the president-elect to move on a repeal even if there’s little guarantee of supplemental policies being passed by Congress.

“We’ve had numerous conversations with the transition team about this and many other issues,” said SEIA President Abigail Ross Hopper on the media call. “I think they very much understand the impact the tariffs have had, what has been built here and what has not been built here as a result of those tariffs.”

Asked about the possibility that U.S. factories could close if the tariffs were to disappear, Hopper pointed out that those companies had opened their facilities with the knowledge that tariffs would only last for an initial period of four years.

“They made that investment knowing, I’m assuming, that the tariffs would come off after four years,” she said. “It should not come as any surprise to those domestic manufacturers that there’s an end to them.”