Feds Should Support Broader U.S. Solar Industry in Trade Dispute

The solar industry has been severely distressed in recent months by a petition before federal trade officials seeking penalty tariffs on imported solar cells and panels. In the last week, the issue was thrust to an even higher profile as a coalition of industry groups and conservative policy think tanks said they were coming together to fight the pending trade case.

It is not every day that you see the Solar Energy Industries Association (SEIA) partner with The Heritage Foundation and other conservative policy groups that have long criticized federal and state policies and tax benefits that promote solar and other renewable energy technologies, going so far as to call them “market distorting.”

But solar energy interests understand the influence high-profile conservative policy groups have on the current administration, and believe that could play a key role in resolving the case favorably.

SEIA and others in the sector are concerned that if the U.S. International Trade Council (ITC) recommends to the White House that the petition be granted, and if President Trump agrees to impose tariffs on solar product imports, the impact on the U.S. industry could be catastrophic.

The Heritage Foundation, the Koch brothers-backed American Legislative Exchange Council (ALEC), and the free-market promoting R Street Institute have joined SEIA and others in the Energy Trade Action Coalition (ETAC). Interestingly, the conservative groups are making an argument similar to ones they have used to oppose policies promoting clean energy: Imposing the tariffs would add another layer of federal subsidies, which free-market advocates fiercely oppose.

The coalition stands against the petition that was filed with U.S. trade officials earlier this year by solar manufacturer Suniva, arguing that the Section 201 trade petition – which seeks a tariff of 40 cents per watt on all foreign-made solar cells and a floor price of 78 cents per watt on all foreign-made panels – would double the price of solar equipment and damage the U.S. solar industry, and the 260,000 workers it supports.

A 201 petition seeks the harshest penalties the United States might impose in a trade dispute (it was last used in 2001), and ETAC says that if the remedies sought by Suniva and SolarWorld are put into effect, the U.S. solar industry would lose 88,000 jobs next year and billions of dollars in private-sector investment would be at risk. A major market analysis shows that U.S. photovoltaic (PV) demand could constrict by as much as 60 percent from 2018 through 2021 if the tarrifs are put in place.

On May 23, the ITC voted and determined the complaint was serious enough to conduct a review to determine whether there is evidence of injury. Two days after the commission vote, SolarWorld, whose German owners have declared themselves “insolvent,” joined in the Suniva, although their press release seems to indicate they may be seeking alternative restrictions on imports.

It is not a foregone conclusion that by the Sept. 22 deadline the commission will find that the U.S. manufacturers are threatened by imports. But the solar industry presumes that the ITC will rule favorably for Suniva and SolarWorld – two of the few remaining U.S. manufacturers – and will recommend specific trade barriers to President Trump by Nov. 13. The president will then have 60 days to act on the recommendation.

Trump has repeatedly said that he will work to promote U.S. manufacturers over foreign competition, protectionist rhetoric that alarms solar industry leaders who fear the president will adhere to his “America First” worldview and impose the penalties on imported solar modules, regardless of the devastating impact they will have on the solar industry here at home.

The simple truth is that foreign-made cells and panels are less expensive than those made here (most other U.S. manufacturers use imported parts), driving the cost of solar development steadily down – some 70 percent since 2010 – and significantly boosting the sector’s growth. We agree with ETAC’s position that granting the petition and imposing tariffs on cells and a floor price on panels “would slash demand for new projects and make solar less competitive with other sources of power, decimating one of America’s most promising high-tech growth industries.”

In fact, Reuters news service reports that just the anticipation of administration action has helped drive investment in major U.S. solar projects down from $3.4 bill during this year’s first quarter to $1.4 billion in the second quarter (and that compares with $1.7 billion during the second quarter of 2016). Also, solar companies are quickly buying up existing panels in anticipation of administration action, driving up prices by 20 percent.

We call on administration officials and the ITC to refute a dogmatic approach to American business, and instead recognize the incredible economic value the solar industry brings to this country. We urge you to listen to your allies in conservative policy circles, to the supporters of this country’s booming solar sector, and to U.S. consumers who are continuously demanding the move to cleaner, and often cheaper, energy alternatives.

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