U.S. President Joe Biden and first lady Jill Biden return to the White House in Washington
Sun, June 5, 2022
By Jeff Mason
WASHINGTON (Reuters) -President Joe Biden will declare a 24-month tariff exemption on Monday for solar panels from four Southeast Asian nations after an investigation froze imports and stalled projects in the United States, sources familiar with the matter told Reuters.
The move comes amid concern about the impact of the Commerce Department's months-long investigation into whether imports of solar panels from Cambodia, Malaysia, Thailand and Vietnam are circumventing tariffs on goods made in China.
Biden's action would allay companies' concerns about having to hold billions of dollars in reserves to pay potential tariffs, one source familiar with the White House's plans said.
"There is going to be this safe harbor timeout on the ... collection of duties, and that's at the heart of what's going to save all of these solar projects and ensure that they are going forward," the source said.
Biden also will invoke the Defense Production Act to drive U.S. manufacturing of solar panels and other clean energy technologies in the future, with the support of loans and grants, the sources said.
State governors, lawmakers, industry officials and environmentalists have expressed concern over the investigation, which could have led to retroactive tariffs of up to 250 percent.
The issue created a unique dilemma for the White House, which is eager to show U.S. leadership on climate change, in part by encouraging use of renewable energy, while respecting and keeping its distance from the investigation proceedings.
Using executive action and invoking the DPA, which gives presidents some authority over domestic industries, allows Biden to take advantage of the tools available to him without stepping on the Commerce Department inquiry.
A second source said Biden's proclamation, relying on authority from a 1930 trade law, would apply only to the four countries and run in parallel with the investigation.
Depending on its outcome, tariffs could be levied on panels imported after the 24-month period, but the threat of retroactive payments would be off the table, the source added.
"If you bring the stuff in during that 24-month period, regardless of the outcome of the investigation, there will not be those additional duties," the second source said.
The investigation essentially halted the flow of solar panels that make up more than half of U.S. supplies and 80 percent of imports.
It had a chilling effect on the industry, according to clean energy groups, some of which asked Commerce Secretary Gina Raimondo to dismiss it. Raimondo has said she had no discretion to influence it.
"The president’s action is a much-needed reprieve from this industry-crushing probe," Abigail Ross Hopper, president of the Solar Energy Industries Association, said in a statement.
"During the two-year tariff suspension window, the U.S. solar industry can return to rapid deployment while the Defense Production Act helps grow American solar manufacturing."
Announced at the end of March, the investigation could take 150 days or more to complete.
Biden has previously invoked the DPA to tackle a shortage of infant formula in the United States, ramp up domestic output of key minerals for electric vehicle batteries, and fight the COVID-19 pandemic through tests and vaccine production.
"It is a tool to do what we obviously desperately need to do, which is rapidly grow the domestic manufacturing capacity" of solar panels," the second source familiar with the matter said.
The administration was "very focused on making sure there's reliable and resilient supply chains at this critical moment for our energy sector, for our ability to support our consumers and to tackle the climate crisis," he added.
Ramping up renewable energy such as solar is crucial to Biden's goal of cutting U.S. greenhouse gas emissions by 50% to 52% by 2030, versus 2005 levels, as well as decarbonizing the U.S. power grid by 2035.
The Commerce Department inquiry has prompted 19 state governors, 22 U.S. senators, and dozens of members of the House of Representatives to express concern in letters to Biden.
"Initiation of this investigation is already causing massive disruption in the solar industry, and it will severely harm American solar businesses and workers and increase costs for American families as long as it continues," said one letter signed by senators including Martin Heinrich, a Democrat from New Mexico, and Thom Tillis, a Republican from North Carolina.
(Reporting by Jeff Mason; Additional reporting by Nichola Groom; Editing by Clarence Fernandez)
Biden takes aggressive executive action to protect solar industry expansion
The Biden administration announced a set of executive actions to boost the domestic deployment of solar power on Monday morning.
The White House announced it is taking steps under the Defense Production Act to increase domestic production of clean energy technologies such as solar panels and their components, as well as directing the federal government to develop plans to buy domestically produced solar products. It is also delaying for two years any imposition of tariffs on solar panels from four countries in Southeast Asia that supply the vast majority of photovoltaic cells to the United States.
“Just on the strength of the president’s vision, the clarity of his vision, and this nation’s commitment to a clean energy future, we’ve seen the private investment and private commitment to growing domestic solar manufacturing capacity triple — or be on pace to triple — by 2024,” said a senior administration official on a Monday morning press call. “But we know that’s not enough, and that’s why the president is taking bold action today.”
The overarching purpose of these moves is to build up a domestic manufacturing supply chain for solar panels without impeding the booming business of installing solar panels. Increasing U.S. installation of solar power is a key element of the president’s plan to combat climate change, but an ongoing Commerce Department investigation has been threatening to block solar deployment, as it could result in heavy tariffs being applied to solar panels and their parts imported from Cambodia, Malaysia, Thailand and Vietnam. The solar installation industry has issued dire predictions about the effect these tariffs would have on U.S. jobs, and Biden’s move has the industry breathing a sigh of relief.
Some American solar panel manufacturers have complained that they are undercut on price by imports from those countries — which they say are actually produced by Chinese companies benefiting from Chinese government subsidies that violate trade agreements. The combination of a two-year grace period for U.S. solar installers to keep importing those products while simultaneously building up the domestic solar manufacturing industry is meant to bolster the U.S. industrial sector and U.S. energy security, so that the American solar industry can keep up with growing demand without relying on products from an adversarial nation.
The Solar Energy Industries Association (SEIA) immediately issued a statement praising the measures on Monday.
“We applaud President Biden’s thoughtful approach to addressing the current crisis of the paralyzed solar supply chain,” said SEIA president and CEO Abigail Ross Hopper. “The president is providing improved business certainty today while harnessing the power of the Defense Production Act for tomorrow. Today’s actions protect existing solar jobs, will lead to increased employment in the solar industry and foster a robust solar manufacturing base here at home.”
The administration also garnered praise from environmental activists, who had been fretting that the impending tariffs would stop the ongoing solar expansion, though some also argued that the ambitious and aggressive use of executive authority should not be limited to just one clean energy industry. (The wind energy industry, which Biden also seeks to boost, is currently fearing a proposal in Congress that could make it more difficult to build offshore wind farms.)
“Today’s executive action by the Biden administration to help unlock the potential of clean energy is what we need more of to address the climate crisis, create a better future for our communities, support domestic manufacturers, and aid our allies abroad by weakening the fossil-fueled war in Ukraine,” said Anusha Narayanan, climate campaign director at Greenpeace USA. “This announcement demonstrates President Biden’s ability to ramp up the transition to renewable energy. Now he needs to go even further by invoking the Defense Production Act across all clean energy sectors, declaring a climate emergency, and addressing the root of the climate crisis by beginning an immediate and equitable phaseout of domestic fossil fuel production.”
Solar power is central to Biden's plan to reduce the greenhouse gas emissions that cause climate change by 50% by 2030 and to reach zero net emissions by 2050. The administration wants solar to go from just 4% of U.S. electricity generation currently to nearly half of the U.S. electricity portfolio by 2050. To get there, it would have to double by 2025 the rate at which solar is being installed and double it again by 2030.
While the executive actions announced Monday may help with solar deployment, the large subsidies for rooftop solar purchases in Biden’s proposed budget reconciliation package remain stuck in the Senate due to opposition from Republicans and Democratic Sens. Joe Manchin of West Virginia and Kyrsten Sinema of Arizona.
Auxin Solar, the San Jose, Calif.-based solar manufacturer that filed the complaint with the Commerce Department that raised the specter of new tariffs on imported solar panels, was sharply critical of the administration's delay in any potential tariffs.
"President Biden is significantly interfering in Commerce’s quasi-judicial process," Auxin Solar CEO Mamun Rashid said in a statement shared with Yahoo News. "By taking this unprecedented — and potentially illegal — action, he has opened the door wide for Chinese-funded special interests to defeat the fair application of U.S. trade law. Since filing this case, Auxin has been well under way to scaling up. If the President will follow through on his stated intent to support the U.S. domestic industry — including grants to scale and produce upstream inputs like cells and wafers — Auxin is ready, willing, and able to meet that challenge."
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