From The Editor | January 23, 2018

Trump Administration Needs A Sunnier Outlook On Solar Power

Ed Biller

By Ed Biller, Editor, Photonics Online

solar panels

On Jan. 23, U.S. President Donald Trump signed a measure imposing a tariff of 30 percent on most imported solar modules, framing it as a bid to help U.S. manufacturers. However, the move appears to show a lack of understanding regarding the U.S.’ solar power industry, as well as a lack of perspective, given the misfires of this administration’s other trade decisions.

The tariff’s principal supporters are two U.S. subsidiaries of foreign companies — one Chinese and the other German — that argue domestic manufacturing of solar components has been undermined by cheaper imports. Per the U.S. International Trade Commission, imports of silicon photovoltaic cells rose nearly 500 percent between 2012 and 2016.

Opposed to the tariff are domestic solar panel installers and manufacturers of related equipment for the industry. While U.S. solar cell manufacturing has dwindled, installations have grown more than tenfold since 2010; as recently as 2016, solar was the largest source of new U.S. electricity-generating capacity. The Solar Energy Industries Association (SEIA), a trade group representing U.S. installers, claims the tariffs will drive up the install cost of solar-power systems, harming consumers and, consequently, scuttling demand.

Per SEIA, “there were 38,000 jobs in solar manufacturing in the U.S. at the end of 2016, and all but 2,000 made something other than cells and panels, the subject of this case. Those 36,000 Americans manufactured metal racking systems, high-tech inverters, machines that improved solar panel output by tracking the sun and other electrical products.”

Those 36,000 jobs -- and potentially more, as those 36,000 represent just a fraction of the overall 260,000 U.S. jobs in the sector, per the New York Times -- will be at risk if the President acts on the Trade Commission’s recommendations. He has until Jan. 26 to do so, and Congress has no authority to contest his decision.

“What’s most disappointing is that the president sided with two foreign-owned companies and didn’t listen to Americans from across the country and political spectrum who understood tariffs will cause great economic pain for so many families in the solar sector,” said Abigail Ross Hopper, SEIA’s President and CEO. However, she added, “Our industry will emerge from this. The case for solar energy is just too strong to be held down for long, but the severe near-term impacts of these tariffs are unfortunate and avoidable.”

Scott Kennedy, director of the Project on Chinese Business and Political Economy at the Center for Strategic and International Studies, notes that — in and of itself — the tariff is not hugely significant: the U.S. already enforces more than 150 other trade measures against various Chinese products. Further, the tariff starts at 30 percent next year, but drops to 15 percent by the fourth year. The first 2.5 gigawatts of solar cells imported each year would be exempted from the tariff.

Still, this feels like an overreach by the Trump administration that benefits relatively few U.S. companies, while having the potential to harm a far greater number of organizations and individuals. In the past year, similar moves attempting to curb imports of Chinese steel, Canadian aircraft, and Canadian lumber all have backfired in some way.

It’s also worth noting that these actions contradict the Trump administration’s oft-repeated mantra of deregulating industry and “letting the free market decide” (i.e., letting natural competition drive up quality while driving down prices). Indeed, the U.S. government pours billions of dollars annually into subsidies for the fossil fuel industry and has, in the past year, worked tirelessly to roll back Obama-era regulations on that industry. Simultaneously, the current administration is pushing to repeal the 2014 Clean Power Plan (one of whose principal targets is — you guessed it — power plant emissions).

Frankly, this pattern of legislation reeks of crony capitalism.

Most recently, in early January, the U.S. Department of Commerce stuck Canadian newsprint manufacturers with an overall preliminary countervailing tariff of 6.53 per cent, the result of an investigation that began in August 2017. In that instance, the change allegedly was implemented to satiate a hedge fund operator who owns a single paper mill in Longview, Wash.

“These tariffs will saddle publishers with additional costs that will hasten the newspaper industry’s shift to digital and, consequently, accelerate the decline in both the printed newspaper and newspaper industry. There will be no winners,” stated David Chavern, president and CEO of the News Media Alliance, a trade industry group representing newspapers.

As a former newspaper reporter, I can testify that the print industry has no great need of new factors to hasten its demise, particularly in the age of digital media. Here’s hoping U.S. legislators will soon realize that, unlike print newspapers, the domestic solar power industry has a bright future, and policy changes capable of stifling renewable energy development affect more than just the folks whose jobs are on the line.

Do you work in, or conduct research whose findings are intended to serve, the solar industry?  I’d love to hear your thoughts in the Comments below.

[Editor’s Note: This column will be updated following President Trump’s final decision on the tariff, which is expected by Friday, Jan. 26, 2018]