Tariffs shadow solar industry
It’s a familiar debate: How best to bring back manufacturing jobs to the United States, including producing solar panels for the fast-growing renewable energy industry. In 2012, the Obama administration agreed that tariffs might work, after concluding that China had subsidized its solar manufacturing industry unfairly. They did not. Now, President Donald Trump has announced 30 percent tariffs on solar panels and modules manufactured almost anywhere but the United States — a move that nearly everyone agrees will cost American jobs.
With higher prices, fewer people will turn to energy from the sun. Because the U.S. solar industry is about installation — not manufacturing — we will lose jobs and businesses will be hurt. Estimates are that some 23,000 jobs could be lost, with growth of solar installation slowed by 10 percent to 15 percent. These tariffs hurt the business that is booming now.
Solar expert Varun Sivaram, writing for The New York Times, explained: “… these tariffs will do little to make American manufacturers competitive with dominant Chinese ones. Instead, they might actually discourage domestic investments in innovation, crucial to an American solar manufacturing revival. On top of this, the tariffs will cause collateral damage by slowing down the installation of solar panels in the United States, destroying more jobs than they create and provoking trade disputes and retaliation.”
New Mexico Sen. Martin Heinrich, in a letter to the International Trade Commission, wrote: “The solar industry is now booming across the nation. According to the Solar Energy Industries Association and the Solar Foundation’s 2016 Solar Jobs Census, 9,000 solar companies employed over 260,000 American workers. One out of every 50 new jobs added by our economy in 2016 was a solar job.”
He and other Democratic and Republican senators who signed the letter, including GOP Sen. Thom Tillis of North Carolina, were trying to stave off the tariff. Their efforts failed, with Trump announcing the tariffs on solar panels and modules (and some washing machines) this week. This decision hurts more than jobs, too. The move to renewable energy, away from fossil fuels, will slow down just when the planet needs clean energy.
It is understandable that Trump and presidents before him want more manufacturing done right here in the United States. Penalizing other countries, though, often does not produce desired results. Two U.S.-based companies asked for the tariffs — Suniva Inc., the Georgia-based subsidiary of a Chinese firm, which declared bankruptcy in April, and SolarWorld Americas, the U.S. subsidiary of a German company. Other companies disagree — U.S. businesses also use foreign manufacturers and will have to pay these tariffs.
Many solar specialists believe a better approach would be bigger investments in research and development, so that American companies can find better ways to manufacture the different parts inexpensively in the United States. Because it takes more than a year to fire up a manufacturing plant to produce the panels, any jobs produced by these tariffs are months away — and that’s if the plants don’t use automation, reducing the number of jobs available. Asian manufacturers have moved so far ahead that with the tariffs expiring in four years, it’s unlikely that U.S. manufacturers can react quickly enough to expand production.
Essentially, the tariffs likely won’t produce the desired result of shoring up U.S. manufacturing. They also will damage a thriving industry (although contrarian Noah Smith, writing in Bloomberg, believes the solar revolution is happening so fast that costs will decrease enough to offset tariffs). Other possible consequences include starting a trade war with China and shoring up coal and other fossil fuel industries, delaying the necessary transition to cleaner energy sources.
As the federal government does the wrong thing, states can act, including New Mexico. Bringing back the state’s now-expired solar tax credit would help keep down the costs of solar energy. Sen. Mimi Stewart, D-Albuquerque, has filed Senate Bill 79, to restore the credit for 10 percent of the total cost of materials and installation with a $9,000 cap. It needs to be passed. That way, solar jobs and businesses in New Mexico can continue to thrive.