Trump solar move could wipe out more jobs
“WE’LL be making solar products now much more so in the United States. Our companies have been decimated, and those companies are going to be coming back strong. . . . A lot of workers; a lot of jobs.”- President Donald Trump, discussing a new tariff on solar- cell imports in remarks at the White House on Jan 23.
Trump says a tariff on solarenergy cells and panels will create jobs and revive a US manufacturing sector that has been decimated by imports.
The tariff sparked controversy in the solar industry after Trump imposed it Jan 23. A couple of remaining US solar- cell manufacturers say it will help them get back on their feet. But the developers that install solar panels and farms - a much larger segment of the industry - say it will hike their costs, kill projects and make it harder to compete with wind and natural gas.
Fueled by low prices and innovations in imported solar cells, the US solar market began to grow at a breakneck pace starting in 2010.
But the tariff is bound to change the dynamics. Will it add “a lot of jobs,” as Trump says?
Relying on a little-used section of trade law that lets him “safeguard” US products being hammered by imports, Trump imposed a tariff on solar cells and modules that starts at 30 per cent in 2018. The tariff then drops to 25 per cent in 2019; 20 per cent in 2020; and 15 per cent in its final year, 2021. The first 2.5 gigawatts of imported solar cells are exempt from the tariff each year.
The bipartisan US International Trade Commission in September ruled 4 to 0 that imports were causing substantial harm to the American solar cell manufacturing industry. More than 95 per cent of the solar panels in the United States are imported, with nearly half coming from just two countries: Malaysia and South Korea.
The tariff rates were set by the Trump administration, not the ITC, and announced by US Trade Representative Robert E. Lighthizer on Jan 23, along with another tariff on washing machines.
According to the National Solar Jobs Census, a yearly study conducted by the non-profit Solar Foundation, there were 260,077 industry jobs as of November 2016, a 24.5 per cent increase from November 2015. Since 2010, solar industry employment has grown by 178 per cent, the group said.
“This 2016 growth has been driven primarily by a massive increase in solar energy installations,” the census report says.
Unlike US solar- cell manufacturers - which have struggled to stay afloat - the developers who install solar panels for homes, businesses, municipalities and utilities have been reaping the benefits of a steep, years-long decline in prices for solar cells imported from lowwage countries. These developers say that in a competitive US energy market, the lower price and higher quality of imported solar cells give them an edge against wind and natural gas suppliers.
As a result, the installation and maintenance side of the solar industry has grown by leaps and bounds since 2010, along with businesses that manufacture supporting products, such as the steel racks used to mount solar panels. Those sectors account for the majority of the 260,000 solar jobs. Meanwhile, on the other side of the industry, 30 US solarcell manufacturers have closed since 2012, laying off hundreds of workers, and the remaining two companies have filed for bankruptcy.
Thomas H. Werner, chief executive of SunPower, testified before the ITC that a tariff would hurt the economy and jeopardise the jobs of more than 10,000 direct and indirect SunPower workers. The company is the second-largest solar energy provider in the United States.
“I can say without hesitation that customers are embracing solar power because of its cost effectiveness and long-term price certainty,” Werner said. “Tariffs would adversely impact the US economy, burden domestic manufacturers and suppliers of other key components, raise prices for customers, and eliminate tens of thousands of jobs.”
The Solar Energy Industries Association, a national trade group, also opposed a tariff in ITC testimony and estimated that 23,000 jobs would be lost in 2018 because of Trump’s move.
The thinking goes like this: Because the tariff will raise the cost of importing solar cells, and few if any US cell-makers can meet the manufacturing volume or technical specs for large-scale projects, solar developers will not be as competitive - and in many cases buyers will choose another energy source. Every lost project means many fewer jobs, since solar panel arrays are fragile and complex and require many different kinds of workers to install.
Independent analysts at GTM Research estimated that Trump’s tariff would cause an 11 per cent decline in the amount of solar power capacity expected to be installed in the United States over five years, from 2018 to 2022. GTM analysts say the tariff will slow but not stop the growth in the solar industry.
Camron Barati, an analyst at IHS Markit, another research firm, said the decline would be nine per cent to 10 per cent over the tariff’s four-year lifespan - a drop from 62 gigawatts in new solar capacity to 56 gigawatts from 2018 to 2021.
“Any increase in price in the future will negatively impact how much solar is installed in the United States, as well as the companies and people that rely on access to competitively priced solar equipment for their livelihood,” Amy Grace, an analyst at Bloomberg New Energy Finance, testified before the ITC.
Here’s how the Solar Energy Industries Association arrived at its 23,000 figure for net job losses in 2018.
The trade group said it took a previous study by IHS Markit on the potential effect of several different tariff rates and adjusted its figures to reflect Trump’s final numbers. The National Renewable Energy Lab has developed a model for estimating how many jobs would be needed for solar installation projects. The Solar Energy Industries Association ran its numbers through that model to estimate how many jobs would be needed in total after accounting for the lower number of solar installations.
The result was a net loss of 23,000 jobs in 2018. Tens of thousands more jobs would be forfeited over the remaining years of the tariff, the group says.
Barati, the IHS Markit analyst, said that was a fair way to estimate employment gains or losses stemming from the tariff.
With that in mind, our next question was whether the tariff could start a boom in solarcell manufacturing. After all, that’s the part of the industry Trump is trying to help. And if his plan works, that could offset the losses on the installation and maintenance side of the industry.
We asked for an estimate of the solar- cell manufacturing jobs that might be created because of the tariff, but neither the White House nor the Office of the US Trade Representative gave us one. — WP-Bloomberg