The Solar Tariff Alternative Is Gaining Momentum

There might be division when it comes to solar, but many power players are all for it – the solar tariff alternative is gaining momentum.

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As per, on Wednesday, the solar industry had perhaps its final real opportunity to convince US President Donald Trump of the advantages of a solar tariff alternative. The solar industry is divided, but many of the major players support this alternative. 

In October, the International Trade Commission (ITC) recommended some very controversial trade remedies. The Office of the United States Trade Representative (USTR) has the challenging job of counselling the president on how to deal with the trade remedies endorsed by the ITC. The latest conference at the USTR saw some 60 witnesses testifying during the eight-hour meeting. However, the Trump appointee that heads the United States Trade Representative was not in attendance at the meeting, which is not a good sign by any means. 

The panel was made up of eight people from a couple of federal agencies (Energy, Commerce and Labor departments, to name a few) and heard all the arguments brought by the 60 witnesses. And most witnesses for the solar case did not recommend that the United States use tariffs or quotas. Their reason was the fact that this method would put American jobs at risk. 

Because of the cheap solar imports, the industry is suffering and under a lot of financial burden, according to SolarWorld and Suniva (both players in the solar industry). The solar companies decided to invoke Section 201 of the 1974 Trade Act this year because of the harm caused by the cheap solar imports. Section 201 allows the president of the United States to impose tariffs, quotas and minimum prices on solar products that are being imported into the country. 

The panel heard that over the last five years, close to 30 U.S. solar manufacturers have closed, according to Matt Card, executive vice president at Suniva. The company has applied for Chapter 11 bankruptcy protection back in April 2017. On the other hand, SolarWorld managed to raise $6 million to avoid bankruptcy – for the time being, at least. The solar trade case is perhaps its last hope. 

Solar Energy Industries Association (SEIA) came up with an interesting proposal, one which the panel members took great interest in. SEIA proposed that tariffs be scrapped and import license fees take their place. These licenses will apply to all crystalline silicon PV (CSPV) panels imported into the US. In other words, the fees will be collected from the foreign companies and distributed fairly among the United States solar manufacturers. 

The idea was pitched once before by SEIA, and one of the four ITC commissioners was convinced that it could work. Commissioner Meredith Broadbent proposed to Donald Trump to impose a minimum price of 1 cent per watt on all import licenses sold by the United States to foreign solar manufacturers. “We think that only Commissioner Broadbent’s [idea] would result in [a positive net-revenue stream for US producers],” stated Abigail Ross Hopper, the president and chief executive officer of SEIA. According to Hopper, the single way to allocate money straight to petitioners is through the ILF [import license fee for solar products].  

Ed Fenster, the cofounder of Sunrun (a domestic solar manufacturer) mentioned that it was predicted that $833 million would be collected in ILF profits over the course of the next four years. The revenues from the license fees for solar products would be usable by the companies in as little as 3 months, while it will take at least one year until companies would see any real benefits from tariffs. 

And American jobs are at risk. Over 200 people marched from the USTR building to the White House on Wednesday – many of them solar workers or advocates. One sign read “Solar feeds my family.” In all, over 1,500 public comments were received by the trade agency, many of them coming from solar businesses, solar workers and solar advocates. Most of them urged the president to reject the solar tariffs. 

Kata, a solar worker employed by Cypress Creek Renewables in Durham, voiced how the tariff would hurt the solar industry as well as American jobs if the tariff were to go through.  

In October, the remedies proposed by the trade commissioners were not as severe as what Suniva and SolarWorld had requested. However, thousands of solar jobs could still be wiped by these measures, estimates SEIA. 

Out of the four commissioners, two approved of having a 30 percent ad valorem tariff placed on solar panels/crystalline silicone PV modules which are imported. The tariff would then decrease by 5 percent per year for the next four years. Talking about solar cells, the commissioners agreed that a “tariff-rate quota” (for four years) is the best option. The “tariff-rate quota” allows, however, for up to 1 gigawatt of solar cell imports that are not to be taxed. The solar tariff would decrease by 5 percent yearly over the next 4 years. 

Many solar industry executives warned that the threat of tariffs had already affected their business. Depcom Power began working on two 100-megawatt solar projects two to three years ago. Robert Rynar, chief engineer at Depcom Power mentioned that because of the case’s ambiguity, and its effects regarding the price of solar modules, the project might not make it in the long run.    

Canadian solar modules should be exempted from tariffs, according to the rules of the North American Free Trade Agreement. This should apply even if the solar modules use cells made in Asia, according to the embassy of Canada. According to some, such as Justin Eichorn, a Minnesota Senator, constricting trade measures against Canada would have a negative impact on Minnesota workers and families. However, a Suniva lawyer stated that no exclusions should be made, not even for Canada. 

It is not yet known what the Trump administration will decide on solar tariffs. Although Trump vowed to protect American jobs, American policies are also very important. The ITC has been asked to create a report for the president, outlining a realistic way to help domestic solar manufacturers compete with solar imports. Trump’s final decision has been postponed to January 26, 2018. He has three options: come up with an innovative alternative, accept the ITC’s recommendations or simply do nothing. As of the time of writing, there is no indication of what Trump will do for domestic solar manufacturers. 



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