Don­ald Trump’s big op­por­tu­nity to crip­ple so­lar

The Denver Post - - PERSPECTIVE - By Mark Jaffe

When Pres­i­dent Trump an­nounced he was with­draw­ing the U.S. from the Paris cli­mate ac­cord, there was much wring­ing of hands. In truth, sub­stan­tively, it wasn’t such a big deal. But come the fall, Trump may have a chance to re­ally hurt Amer­i­can car­bon-re­duc­tion and re­new­able-en­ergy ef­forts.

Sit­ting be­fore the U.S. In­ter­na­tional Trade Com­mis­sion (ITC) is a pe­ti­tion from two bank­rupt so­lar-panel man­u­fac­tur­ers cit­ing an ob­scure and rarely used sec­tion of trade law that would give the pres­i­dent power to im­pose sweep­ing tar­iffs on im­ported so­lar cells. Tar­iffs that could dou­ble the cost of a panel.

As part of his “Amer­ica First” mantra, Trump has been spoil­ing to show how tough he is on trade. He slapped a tar­iff on Cana­dian soft lum­ber, even though economists say it will boost the price of new homes, and is re­port­edly con­sid­er­ing a tar­iff on steel from China and other coun­tries, even though that will in­crease the cost of Amer­i­can­made au­to­mo­biles.

While those tar­iffs add in­cre­men­tal costs, the pro­posed world­wide tar­iff on so­lar pan­els could be dev­as­tat­ing.

New so­lar in­stal­la­tions would be cut in half be­tween 2018 and 2022, ac­cord­ing to an anal­y­sis by GTM Re­search, a clean-teach con­sult­ing firm. The So­lar En­ergy Industries As­so­ci­a­tion (SEIA), an in­dus­try trade group, es­ti­mates it would result in the loss of 88,000 jobs na­tion­ally, about a third of all the jobs in the so­lar sec­tor.

Among the hard­est hit states would be Cal­i­for­nia with 15,800 jobs lost and South Carolina with 7,000 jobs. About 2,000 of Colorado’s 6,000 direct so­lar jobs would also be at risk.

“We are wor­ried it will jeop­ar­dize the abil­ity of thou­sands of Coloradans to go so­lar,” said Rebecca Cantwell, ex­ec­u­tive di­rec­tor of Colorado So­lar En­ergy Industries As­so­ci­a­tion, a trade group.

This is po­ten­tially a much big­ger deal than say­ing adiós to the Paris ac­cord. For while the U.S. lost the moral high ground and world lead­er­ship, the re­duc­tion of the na­tion’s green­house gases — pri­mar­ily car­bon diox­ide — linked to cli­mate change will con­tinue.

Even without the Paris ac­cord or the Obama ad­min­is­tra­tion’s Clean Power Plan (CPP), likely to be scrapped by Trump, U.S. car­bon emis­sions are pro­jected to de­cline 30 per­cent be­low 2005 lev­els by 2030, ac­cord­ing to Bloomberg New En­ergy Fi­nance. That drop would pretty much meet both the coun­try’s Paris tar­gets and the CPP.

There are still 46 coal-fired power plants slated to close in the next few years, and the util­ity in­dus­try is pro­jected to add more wind and so­lar gen­er­a­tion as prices for both con­tinue to drop. At least, that’s the way it looked un­til Nor­cross, Ga.-based Su­niva Inc. filed its ITC com­plaint.

Su­niva, which has been joined by Hills­boro, Ore.-based So­lar­world Amer­i­cas, is ask­ing for a 40-cent-a-watt tar­iff on all im­ported so­lar mod­ules. The go­ing price right now is be­tween 40 and 32 cents a watt. It is also seek­ing a min­i­mum floor price of 78 cents a watt.

The so­lar panel mak­ers filed their pe­ti­tion un­der sec­tion 201 of the Trade Act of 1974, which al­lows the pres­i­dent to im­pose across-the-board tar­iffs if a pe­ti­tioner can show “se­ri­ous in­jury” to a do­mes­tic in­dus­try.

This is not like a dump­ing case, in which a pe­ti­tioner has to show that man­u­fac­tur­ers in a par­tic­u­lar coun­try are sell­ing be­low cost. So­lar­world and five other U.S. pro­duc­ers were suc­cess­ful in a 2012 dump­ing case and had tar­iffs imposed on Chinese so­lar pan­els.

This would be a world­wide tar­iff. Sec­tion 201 hasn’t been used often be­cause the bar is higher than in a dump­ing case, and it was felt a pres­i­dent would be re­luc­tant to use it—un­til now.

In some twisted way, Trump might even see this as a way to help the coal-min­ing in­dus­try.

GTM Re­search has cal­cu­lated that un­der the min­i­mum 78cents-a-watt price, the amount of so­lar in­stalled be­tween 2018 and 2022 would drop to 34.6 gi­gawatts from 72.5 gi­gawatts.

If the 40-cent tar­iff was added to the floor price, it would raise the cost of so­lar cells to $1.18 a watt, and new so­lar in­stal­la­tion would crater to 25 gi­gawatts be­tween 2018 and 2022.

Hard­est hit would be util­i­tyscale so­lar projects, which have driv­ing the mar­ket in the last few years.

“Nowhere in the pe­ti­tion does it re­quest the floor price and tar­iff in­ter­act in this man­ner,” Su­niva said in a state­ment. “GTM’S anal­y­sis suf­fers from a fa­tal flaw in its core as­sump­tion.”

GTM says it stands by its anal­y­sis, and even at the 78-cents-awatt level, the im­pacts are se­vere.

While Sec­tion 201 is sup­posed to be pro­tect­ing do­mes­tic man­u­fac­tur­ers, Su­niva’s prin­ci­pal owner is Hong Kong-based so­lar com­pany Shun­feng In­ter­na­tional Clean En­ergy Ltd., and So­lar­world’s par­ent is So­lar­world AG, with head­quar­ters in Bonn, Ger­many. Su­niva filed for bank­ruptcy in April, So­lar­world in May.

It gets murkier. When Su­niva de­clared bank­ruptcy, one of its cred­i­tors, Wall Street as­set man­ager SQN Cap­i­tal, agreed to give Su­niva an ad­di­tional $4-million credit line in order to make its way through bank­ruptcy. As part of the deal, Su­niva had to file the case with the ITC against im­porters. SQN is a spe­cial­ist in ac­quir­ing and sell­ing dis­tressed ma­chin­ery, and it ap­pears to be look­ing to ob­tain and sell Su­niva’s equip­ment.

There is no ques­tion that im­ports un­did U.S. so­lar panel mak­ers, and Colorado shared part of that pain as Love­land­based Abound So­lar filed for bank­ruptcy in 2012. And in 2013, the Gen­eral Elec­tric Co. aban­doned plans to build a $300-million so­larpanel plant in Aurora.

The ques­tion is whether this tar­iff will do any more than raise the price of pan­els. Su­niva said it will sta­bi­lize prices “giv­ing U.S. man­u­fac­tur­ers the op­por­tu­nity to re­open shut­tered pro­duc­tion fa­cil­i­ties and re­hire the thou­sands of Amer­i­can work­ers.”

Oth­ers aren’t so sure. In a note to clients, Hugh Brom­ley, a Bloomberg an­a­lyst, re­port­edly, called the Su­niva com­plaint “rid­dled with holes and hypocrisies.”

Any sup­posed job gains un­der the pe­ti­tion would be wiped out by job loss across the so­lar sec­tor, said SEIA CEO Abi­gail Ross Hop­per. “Rather than help the in­dus­try, the ac­tion would kill many thou­sands of Amer­i­can jobs and put a stop to bil­lions of dol­lars in pri­vate in­vest­ment,” she said.

The ITC has un­til Oct. 23 to make its de­ci­sion. If it de­ter­mines the pe­ti­tion has merit, it will send a rec­om­men­da­tion to the pres­i­dent, who will then have 60 days to act.

There is the chance other coun­tries would take the U.S. to the World Trade Or­ga­ni­za­tion for un­fair trade prac­tices or im­pose re­tal­ia­tory tar­iffs. And while we all know Trump likes to be a win­ner, a trade war is one war he will not be able

to win.

Kevin Frayer, Getty Images

A Chinese worker car­ries a so­lar panel in Huainan, An­hui Prov­ince, China. A pro­posed U.S. tar­iff on so­lar im­ports could dou­ble the price of pan­els.

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