Trump admin weighs new wind tariffs. Will projects stall?

Source: Avery Ellfeldt, E&E News reporter • Posted: Thursday, July 18, 2019

 International Trade Commission building. Photo credit: Ellen M. Gilmer/E&E NewsThe U.S. International Trade Commission in Washington. Ellen M. Gilmer/E&E News

A group of U.S. wind tower manufacturers are pushing for tariffs on imported wind components, a move that some researchers say could raise costs for new projects by as much as 10% at a time the industry is already under pressure.

The Wind Tower Trade Coalition asked the Commerce Department and U.S. International Trade Commission to impose tariffs against wind tower imports from Canada, Indonesia, South Korea and Vietnam in a petition this month. The manufacturers argued that components from the four countries are sold below the prices set in the 1930 Tariff Act.

Those lower prices — and subsidized towers from Indonesia, Canada and Vietnam — are harmful to domestic manufacturers, the petition says.

“These unfairly traded imports have materially injured the U.S. domestic industry producing wind towers and threaten to cause further material injury if remedial action is not taken,” the coalition wrote.

The development is the latest intersection between the renewable industry and Trump’s trade battle with Asia. Last year, Trump imposed tariffs on the solar industry after U.S. manufacturers similarly petitioned they were being unfairly disadvantaged by solar companies overseas. Trump also imposed tariffs on aluminum and steel last year.

And this time, some analysts think wind tariffs might go through.

In a research note this week, ClearView Energy Partners said the petitioners might get exactly what they want, given Trump’s affinity for tariffs and favor for manufacturers.

Washington appears to have “de-prioritized energy production,” the firm wrote, and tariffs already imposed by the Trump administration have raised oil, pipeline and solar costs. Eight of the nine domestic wind tower manufacturing facilities are located in states that voted for Trump in 2016, according to ClearView, which might also give manufacturers added favor with the president.

“We would suggest that manufacturers may carry more weight in the Trump White House than the notional beneficiaries of lower-cost wind towers,” ClearView wrote. It predicted that Commerce and USITC would ultimately support the petition.

The four countries in the petition made up 84% of wind component imports during 2018. If tariffs were imposed, costs for wind projects could increase between 5% to 10%, although U.S. manufacturers could supply the U.S. market on its own in theory, the firm said.

Meanwhile, the production tax credit for wind will be phased out by the end of the year. If tariffs hit as the PTC ends, the build-out of wind projects could create a two-pronged hit for the industry, according to analysts.

“Any substantial increases in strategic component costs — such as a turbine’s steel tower — runs the risk of compounding the negative impact of the PTC phaseout and reduce demand for wind energy in the United States,” said Dan Shreve, the head of global wind energy research at Wood Mackenzie.

Some industry members have not pushed for a PTC extension and have focused on the prospect of a new federal tax credit for energy storage. But the idea of a wind PTC extension is under debate in Congress (E&E Daily, June 21).

The American Wind Energy Association, meanwhile, has echoed concerns about the impact of tariffs on wind projects in the past. While AWEA did not comment on the coalition’s petition, it said in a fact sheet this year that “high and sweeping tariffs” on wind components would exasperate financial barriers for U.S. developers. It added that tariffs could eliminate up to 21,000 jobs that are vital to rural U.S. economies.

Reporter Christa Marshall contributed.