Biden Pausing Solar Tariffs, Pushes for U.S. Production
The White House is moving to support the solar power industry, including U.S. manufacturing of solar panels and other equipment, by pausing tariffs on imported solar panels from four Southeast Asian countries. The 24-month moratorium announced June 6 will exist while U.S. officials continue to look at the practices of Cambodia, Malaysia, Thailand, and Vietnam, countries that are being investigated for possibly circumventing tariff rules.
The solar power industry has decried the investigation, saying it has led to supply chain constraints that are threatening U.S. solar power projects, and industry jobs. Officials from across the U.S. energy sector on Monday applauded the move, saying it should lead to more certainty regarding equipment used for power generation, transmission, and distribution.
President Joe Biden on Monday issued plans for the two-year exemption on tariffs, noting the investigation’s impacts on the solar power industry, and its threat to the administration’s own clean energy goals. The White House said it would continue to push Congress “to pass clean energy investments and tax cuts” to spur U.S. manufacturing. Biden also said he would authorize use of the Defense Production Act (DPA) “to accelerate domestic production of clean energy technologies, including solar panel parts.” The president, as part of Monday’s move, also issued a memo supporting domestic production capability of electric heat pumps.
Morten Lund, an energy partner with Stoel Rives, told POWER, “Postponing the effectiveness of a potential tariff expansion is a big deal and this freeze seems to indicate it would effectively kill the retroactive portion of the tariffs. That takes care of the uncertainty issue, which frankly is at least as important as the tariff itself.
“Development and procurement has slowed significantly in advance of the tariff ruling, and this gives the industry price certainty which will allow us to proceed with development effects. This benefit is not just for the duration of the freeze, but also thereafter—if there is a tariff expansion this year, we will have two years to prepare for it and price it into projects. It would actually be a significant benefit if all tariffs came into effect this way, with a lead-up transition. The inability to plan ahead always causes a temporary pause and is very harmful.”
Tariffs Imposed on Chinese Equipment
The tariffs were initially imposed by the Obama administration on Chinese and Taiwanese solar cells and modules, in an effort to make U.S.-produced solar equipment more competitive. Auxin Solar, a small-scale California-based solar panel manufacturer, earlier this year submitted a petition to the U.S. Department of Commerce alleging that Chinese companies were dodging the tariffs by building solar cells and modules in Cambodia, Malaysia, Thailand, and Vietnam. The petition alleged the equipment being built in those countries was still using Chinese-built polysilicon wafers and other materials, as well as Chinese intellectual property.
The Commerce Dept. began an investigation in March, and U.S. solar developers almost immediately reported supply chain disruptions and a sector-wide slowdown.
Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association (SEIA), in a statement Monday said, “We applaud President Biden’s thoughtful approach to addressing the current crisis of the paralyzed solar supply chain. The president is providing improved business certainty today while harnessing the power of the Defense Production Act for tomorrow. Today’s actions protect existing solar jobs, will lead to increased employment in the solar industry and foster a robust solar manufacturing base here at home.”