Trump gives, Biden (and Xi) takes.
On February 22, LG Electronics USA, based in Huntsville, Alabama, announced that it was leaving the solar business. Some 200 workers have been slipped into a green economy that is rapidly becoming an Asian jobs program.
The company accuses “supply constraints” and “logistics costs” for the release.
They are too diplomatic.
Supply constraints mean that key raw materials for making solar panels – starting with polysilicon – are at least partially sanctioned by the United States due to forced labor in Xinjiang province, home to countless of Muslims living in detention centers that Beijing calls re-education camps. At least one major player, Hoshine Silicon Industries, is barred from being part of the US solar supply chain. Everyone in the industry called it problematic. Penalties and the threat of additional penalties imposed by so-called suspension of release orders by Customs and Border Protection make business uncertain.
Logistics costs could mean the amount transoceanic shippers charge, but I’ll add that it also means that LG is about to be vastly undervalued by Chinese multinationals and South Koreans aren’t interested in solar price wars.
This is a war that China has already won.
First, a brief history to understand the big picture.
Since 2014, China has been hit by anti-dumping tariffs on its solar exports to the United States. This has raised prices by 50% or more for solar producers in mainland China and Taiwan. China quickly moved into Malaysia, Thailand and Vietnam, investing billions to avoid these anti-dumping duties.
Then in 2018, Trump slapped them all with tariffs, known as Section 201 solar rates. It doesn’t matter where the solar energy comes from, it would cost more to import.
For a man who doesn’t believe in climate change, Trump saved the domestic industry from obsolescence.
Since then, the Solar Energy Industries Association (SEIA), composed mainly of Chinese exporters (yes, Canadian Solar manufactures everything in Asia and its CEO is Chinese), and solar installers (construction and engineering companies that do not manufacture solar panels) have been involved in heavy pressure and trial to stop these tariffs.
They were relentless. They won over many senators, both Democrats and Republicans.
Jacky Rosen (D-NV) and Jerry Moran (R-KS), argued for more solar imports, while senators like Sherrod Brown (D-OH) and Marco Rubio (R-FL) argued for the opposite.
Rosen always jumps on solar free trade. This will totally gut the US solar industry.
Trump’s Section 201 tariffs expired this year. After numerous solar industry hearings with the U.S. Trade Representative‘s Trade Policy Committee, and after a final report from the International Trade Commission in December that recommended keeping Section 201 tariffs for another four years, President Biden has decided to roll with the importers.
On February 4, Biden went against the ITC’s recommendation. He decided to keep some tariffs on solar panels and solar cells, the squares that plug into the solar panels you see on rooftops and on fields across the country, but opposed the ITC on two key points. These two points make the rates toothless.
First, it almost doubled the quota on the number of solar cells that can be imported into the country. Most solar cells, like 80% of them, are made in Asia. China dominates this market.
Second, and more importantly, Biden went against the ITC’s decision to keep tariffs on double-sided solar panels. These panels, known in the industry as “bifacial solar”, are primarily used by utility companies.
Trump had those tariffs in place, but SEIA sued them and put them in limbo. The ITC said Biden should hand them over. Biden sided with SEIA and others like Rosen and Moran. This means that the large solar power utilities you see across the country will increasingly be made in China.
In one fell swoop, Biden made China the new Sunshine OPEC.
last April, Biden said, “When I think of climate change, I think of jobs…there’s no reason the blades that spin on wind turbines can’t be built in Pittsburgh instead of Beijing. No reason.”
He didn’t mention solar, though. Instead, it focused on installers. Installers install solar panels made almost entirely by Chinese multinationals.
Of the top 10 solar panel manufacturers in the world, 8 are Chinese, one South Korean and one American – that’s First Solar
Biden wants solar to power 40% of America’s electricity by 2035. It’s only 3% today. SEIA said the only way to do this is to import.
For years, China has taken inspiration from Western fears of climate change to become the leading manufacturer of electric cars, electric vehicle batteries, wind turbines and solar panels.
The US is moving from energy independence to relying on China to make solar power which, if Biden’s goal is met, will be responsible for 40% of US electricity.
As it stands, most rooftop solar panels come from companies like Trina, also Chinese.
By removing tariffs on solar power, Biden went against his own constituents.
In December, a survey by Morning Consult showed that 80% of registered voters agree that the United States should rely on locally produced solar panels, rather than imports.
With the exclusion of bifaces from customs tariffs and the import quotas for solar cells which have almost doubled, it is difficult to know whether an American producer will take over from LG.
Solar cell imports will increase, which could lead to an increase in solar panel production in the United States. But one of the main risks is that bifacials can be easily sold as monofacial, purposely mislabeled for export as double sided as a sleight of hand to bring tariffed monofacial solar into the country without the tariff of l 201.
Last year, domestic solar makers failed to convince the Commerce Department to sue Southeast Asia for dumping. Solar exports from Malaysia, Thailand and Vietnam increased by around 30%. And although US-based companies also have factories there, the bulk of exports come from Chinese multinationals simply because they account for most of the market.
It is plausible that a new anti-dumping case could emerge as people here desperately seek to survive. These things take years, though.
SEIA counted on inflation fears and the climate change lobby for support in blowing up the ITC’s recommendation to Biden.
Trump’s solar tariffs had no impact on the US market for solar power installations as SEIA predicted. Installs grew 43% in 2020, even with the rates. The United States mainly manufactures solar panels, which rely on solar cells imported mainly from Asia, and mainly from Chinese companies, but not always.
Solar installations are expected to be more than 50% higher than they were expected to be before Tariff 201 was implemented in 2017, the year before ‘climate science denier’ Trump gave solar manufacturers Americans a lifeline.
This has now come to a head as Biden’s decision handed over the US solar industry to China, especially for utility-grade solar power. SEIA members told the USTR during the hearings that the United States lacks the capacity to build utility-grade solar power. The removal of tariffs, long stalled due to SEIA lawsuits, means that a US company is much less likely to invest in this sector of the market if it is in direct competition with China.
Biden’s decision is a major setback for U.S. solar makers and the non-Chinese global solar industry, of which LG is a part. The decision to shut down Alabama’s solar business came from South Korea.
Unless the Commerce Department backtracks and reviews anti-dumping petitions against Southeast Asia, or production tax credits under the stalled Build Back Better Act, like the think some industry players, China will have an even larger share of the US solar market. .
President Biden is right: climate change can be a pro-American jobs agenda. But will jobs go to installers and will construction workers and fabricators be forgotten? Both should be part of this program.
The pro-climate crowd in the US is mostly made up of Eurocratic jet-setters (think John Kerry and former lobbyists from Biden’s inner circle); who all hate Trump. While the White House’s removal of tariffs isn’t a knee-jerk reaction to Trump (if Trump did it, I have to reverse it), it’s a throwback to the interdependence of the age of globalization. kumbaya.
The problem is that interdependence has become dependency.
When it comes to energy security, if the US wants to keep its lights on with solar panels, as Biden and the Democrats clearly believe, then relying on Xi’s OPEC Sunshine is a bad idea.
This does not mean that the United States cannot import solar energy from Chinese multinationals. But all that? China would never do that. And neither do we.