Trump could punish China over solar panels; US might suffer too

AS PRESIDENT Donald Trump’s tweets over the weekend illustrated, the commander in chief has a lot on his mind.

Trump, however, does not appear to be paying a ton of attention - at least publicly - to one of his bread- and- butter issues: trade. But a key ruling last week in the energy sector could produce tariffs on foreign solar panel-makers, driving a big wedge in the industry as Trump needs to decide whether to apply his “America First” motto to renewables. ( There would also be less - or more expensive - solar panels for the building of the border wall that Trump has said he would like to power with the energy source).

On Friday, the International Trade Commission voted in a 4-to- 0 decision that cheap solar cell imports were unduly hurting US manufacturers. This year, Suniva and SolarWorld Americas, two solar panel makers respectively owned by German and Chinese fi rms but based in the United States, petitioned the commission for relief as imports of solar cells “have unexpectedly exploded and prices have collapsed.”

The ruling puts Trump in a political bind: it could potentially allow him to impose tariffs on China, a favourite nemesis on trade. But it would punish the US solar industry in the process.

The two companies who petitioned the ITC are, naturally, happy to see their complaint move forward. “We brought this action because the US solar manufacturing industry fi nds itself at the precipice of extinction at the hands of foreign market overcapacity,” Suniva said in a statement.

But much of the rest of the US solar industry - which includes not just manufacturers but rooftop installers and solar farms that benefit from low- cost panels - is not pleased. Although solar power accounts for only about one per cent of US electric generation, cheap solar cell prices - coupled with a federal tax credit that will begin to be phased out in 2020 - are fueling a US solar energy boom. The abundance of cheap foreign panel in the United States has encouraged homeowners and businesses to install rooftop units and power companies to invest in utility- scale solar farms.

The largest solar trade group in the nation, the Solar Energy Industries Association, has called the petition “deeply fl awed.” After the commission’s decision, Abigail Ross Hopper, the solar association’s president, said, “This is a case about two companies who are bringing a petition about which almost the entire rest of the solar industry is in agreement in opposition.”

The commission has until Nov 13 to draft recommendations, after which the White House has 60 days to accept or reject the proposal. If the commission and the president acquiesce to Suniva’s request, the effect could be drastic.

“Suniva’s petition asked for a 40- cent- a-watt tariff on solar cells and a 78- cent- a-watt floor on module prices,” The Washington Post’s Chris Mooney and Steven Mufson write. “Moody’s said that would ‘virtually double the cost of panels.’ “

The renewable energy business has gained some unexpected allies in the solar tariff fi ght. The conservative Heritage Foundation argues that “neither subsidies nor tariffs will make the solar industry more competitive in the long term.” Two Republican governors - Brian Sandoval ( Nevada) and Charlie Baker ( Massachusetts) - worry about the “devastating blow” a tariff would have on their states’ burgeoning solar industry.

There’s even a national security argument being marshalled against a potential tariff. A group of retired military men and women who worked in building Defence Department energy infrastructure wrote a letter to the commission expressing their “deep concern” higher panel prices will have on “fi nancial viability of planned and future solar investments on or near domestic military bases.”

But for Trump, the commission’s decision presents a rare opportunity for him to penalise two of his favourite punching bags - China and Mexico, which was also named in the ITC ruling and exports solar panels - without Congress getting in the way.

Even when many forces weigh against a decision (see: Paris climate agreement), Trump has proved again and again that Trump will be Trump. And it’s that populist instinct that has most of the US solar industry worried. — WPBloomberg

This is a case about two companies who are bringing a petition about which almost the entire rest of the solar industry is in agreement in opposition. Abigail Ross Hopper, solar association’s president