President Biden launched his climate agenda this week with a pair of actions designed to boost the solar energy industry in the United States. First, he invoked the Defense Production Act to ensure US manufacturers get the materials they need to produce solar panels. Second – and more controversially – his administration announced a two-year pause on new tariffs for solar panel imports. This will allow companies from Vietnam, Malaysia, Thailand and Cambodia to export solar power systems to the United States without fear of paying high fees.
Why controversial? Because the announcement disrupts a Commerce Department investigation into whether China avoided U.S. tariffs on its heavily subsidized solar industry by relocating its businesses and manufacturing to those other Southeast Asian countries. “The investigation will continue uninterrupted,” NBC’s Josh Lederman reported. But if violations are found, “no one will be punished”. Now, U.S. solar companies are talking about taking legal action to challenge the tariff break, arguing that disrupting a “quasi-judicial” investigation ends up helping foreign companies at the expense of domestic manufacturers. Are Biden’s latest measures a necessary means to ensure the expansion of green energy, or are they a drag on American industry?
Consumers will benefit. The Democrats?
The tariff break “is good news for consumers”, according to The Wall Street Journal’drafting committee. Cheap solar panels are good for people looking to be less dependent on a power grid still largely powered by fossil fuels, “but they also create a political and economic paradox for Democrats.” The problem? Liberals want to wean the country off climate-polluting oil and gas, but many of the jobs created by a shift to clean energy sources “will be in countries where labor and energy costs are lower”. Biden used the Defense Production Act to help American manufacturers, yes, but it just proves that “energy problems created by left-wing climate policies are a national emergency that demands a command-and-control solution.”
We must fight climate change
“Fast installation of solar energy” is a “key pillar” in the fight against climate change, writes Emily A. Beagle on The conversation. The United States must generate 25 gigawatts of new solar capacity each year to meet the Biden administration’s climate goals, but “imposing tariffs could result in solar capacity reaching only 70-80% of that.” objective”. Indeed, the Commerce Department investigation was already slowing that effort, with more than 300 projects “delayed or canceled since the case was presented.” Biden’s boost to solar could help the industry, but if the US is going to drastically reduce carbon emissions, the responsibility “lies more broadly with Congress, which could yet pass landmark climate legislation.”
But other US industries could be affected
The U.S. steel industry fears that a climate-motivated tariff break will end up “making it harder for U.S. industrialists to win new rights in future disputes,” report Joe Deaux and Jennifer A. Dlouhy for Bloomberg. The fees at issue are a century-old tool the U.S. government uses “to level the playing field between domestic manufacturers and imported products that are subsidized or sold below cost of production.” And they have generally been invoked “on the basis of a narrow set of criteria centered on competition, subsidies and prices”. Adding climate change to the mix could complicate the steel industry’s efforts to gain federal protection from foreign competitors: “Adding climate considerations or other public interest tests would create a slippery slope.”
Energy security is national security
Biden’s decisions “show that the White House is beginning to treat climate change and clean energy as national security issues,” writes Neel Dhanesha for Voice. It’s part of a trend that has “seen the definition of national security evolve to encompass more than military spending” to include things like COVID-19 treatments and infant formula. This is a good thing. Biden’s DPA clearance “puts the country on the path to energy independence” and signals that such independence is a priority “even if the market would prefer cheaper imports.” Biden’s paired solar announcements should allow all of these delayed projects “to move forward immediately, while giving U.S. solar manufacturers time to ramp up production to meet the needs of future projects.”
It’s a compromise
Taken together, the tariff break and the DPA order constitute “a middle ground between opposing camps”, writes Julian Spector for Canary Media. Solar power makers need help competing with foreign companies, but solar installers need affordable panels to use on projects right now. “The interests of both parties have been recognized” with the two movements twinned. Yes, Biden risks sending the message that if “effective enforcement of trade law causes a domestic supply crisis, then he will not enforce trade law.” But Chinese solar tariffs have been in place for a decade “without stimulating a thriving domestic supply chain”. That’s why Biden tried something different. “Doing more of the same will not achieve a renaissance in American solar manufacturing.”