Donald Trump’s big opportunity to cripple solar
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.