President Trump’s tariffs on Chinese solar panels are dividing the solar industry and causing activists to go crazy, but it’s a good thing.
Environmentalist activists and others mentally allergic to the name Donald Trump are flipping out over a new tariff on imported solar panels. This move has fractured the solar industry, showing us the two different faces of the solar movement, if you want to call it that.
Last week, President Trump imposed a 30% tariff on China-made solar panels. Environmental groups began kicking and screaming, claiming the President was in bed with fossil fuel companies and this was going to kill 23,000 jobs. Michael Bloomberg, the billionaire former mayor of New York, tweeted that the tariffs would “raise Americans’ electric bills and hurt our environment.” You might have thought he had just ordered The Purge. Even some Libertarians were up in arms, suggesting we are embarking on a trade war with China. This is, of course, the only real logical stance against this tariff, but I’m still not buying it.
This tariff is designed to reduce the amount of super cheap panels coming into the US. It came about, to begin with, when solar panel manufacturers Suniva and SolarWorld filed Section 201 the Trade Act of 1974 petitions at the International Trade Commission (ITC) claiming the imports caused “ substantial cause of series injury.” The ITC agreed. Largely due to a surge in imports of lower-priced solar panels, 25 U.S. solar panel manufacturers have gone out of business since 2012. Suniva and SolarWorld have since filed for bankruptcy.
I am a believer most tariffs are a waste and rarely do anything good for our economy. Nonetheless, this, in my humble opinion, falls outside of that rule for two main reasons.
First, I believe in a fair marketplace. Allowing markets to flourish on their own is the bedrock principle of American capitalism – one of the reasons I have long despised solar subsidies – but I digress. The reason the China panels are so inexpensive isn’t that they have some unknown trade technology savings costs. It is because they have no environmental protections and poor human rights.
For example, the byproduct of polysilicon production, silicon tetrachloride, a highly toxic substance that poses environmental hazards, is being dumped right into the Yellow River. National Geographic wrote about the fears of generic solar manufactures disrupting the market with environmentally-unfriendly panels in 2014.
The decision to place a tariff on Chinese Panels brought mixed reactions from the industry as well. Juergen Stein, CEO, and President of SolarWorld Americas Inc. praised the tariffs in a statement:
“SolarWorld Americas appreciates the hard work of President Trump, the U.S. Trade Representative, and this administration in reaching today’s decision, and the President’s recognition of the importance of solar manufacturing to America’s economic and national security. We are still reviewing these remedies, and are hopeful they will be enough to address the import surge and to rebuild solar manufacturing in the United States.”
And, consider these remarks from Geoff Mirkin, the CEO of Solar Energy World, not to be confused with Solar World (no wonder the industry is having a hard time – they can’t even trademark well):
“The fear of the tariff has actually caused more damage to the industry than the tariff itself, Our industry will survive. It always does. Our company will not be affected negatively because we knew this would be coming and were prepared”
Contrarily, Abigail Ross Hopper, President and CEO of the Solar Energy Industries Association said this:
“While tariffs, in this case, will not create adequate cell or module manufacturing to meet U.S. demand, or keep foreign-owned Suniva and SolarWorld afloat, they will create a crisis in a part of our economy that has been thriving, which will ultimately cost tens of thousands of hard-working, blue-collar Americans their jobs.”
The 30% tariff is not permanent, by the way. It’s due to drop 5% each year ending at 15% and the first 2.5 gigawatts are exempt. Hypothetically, the solar market should be recognizing there will be a need for increased domestic manufacturing and spring into action. Capitalism would, ordinarily, produce the innovation required to satisfy the market demand but, as we all know, solar is not just any other market. The number of subsidies the market already depends upon, keeps it artificially afloat. According to the Reason Foundation:
“It is true that the Chinese solar panel manufacturers have received lots of subsidies, so too has the U.S. industry. Overall the U.S. solar power industry has benefited from tens of billions of dollars in subsidies, loan guarantees, tax credits, and state renewable portfolio standards that require utilities to sell a specified percentage or amount of renewable electricity to its customers.”
My bet is those who are pleased with this tariff decision are hoping additional ratepayer and taxpayer money will be thrown thrown their way for domestic manufacturing – further increasing their reliance on government interventionism. Those opposed, by contrast, are worried the added costs of panels will make them less able to exploit government subsidies. This is what I mean by the two faces of the movement. Both, however, are feasting their eyes on subsidies.
When all has been said and done, though, it is a just a bunch of hubbub for a technology that represents but 6% of the 10% of our current energy consumption attributable to renewables.