Democrats are tussling over the Biden administration’s anti-dumping probe into Chinese solar makers, and it’s an eye-opening tussle. Progressives want cheap, plentiful green energy that drives American manufacturing, but they’re finding they can’t have it all.
The Commerce Department in March launched an investigation into whether solar companies are circumventing anti-dumping duties on China by diverting production to Southeast Asia. Cue the accusations from solar power producers, rooftop solar companies and their friends in Congress that the administration is sabotaging their own green energy goals.
“This investigation could expand harmful and job-killing tariffs on solar imports, increasing costs for consumers,” 22 senators, including 19 Democrats, warned this month.
On the other side of this fight are American solar manufacturers, unions and members of Congress from the Rust Belt, including Ohio Senator Sherrod Brown. They warn that solar imports will jeopardize US manufacturing jobs unless Commerce steps in.
The roots of this dispute go back a decade. After the 2008-2009 recession, Democrats sold green subsidies in Obama’s stimulus package as a way to revive American industry. But then the Chinese figured out how to produce cheap solar panels on a large scale with cheap labor and cheap energy (i.e. coal). Between 2008 and 2013, global solar prices fell by 80%.
In 2012, the Obama administration responded to complaints from US manufacturers that their foreign competitors were benefiting from government subsidies by raising tariffs of up to 250% on Chinese imports. Forget that the Energy Department also provided loan guarantees to Solyndra and other US startups.
Rather than spur domestic manufacturing, the tariffs have pushed Chinese companies to shift some of their production to Southeast Asia. China now represents only 1% of solar imports, while Malaysia represents 31%, Vietnam 29% and Thailand 26%. US-made photovoltaic panels accounted for about 20% of the solar market last year.
U.S. solar makers are now saying Chinese companies are avoiding tariffs. Maybe they are, but the drop in photovoltaic panel prices has been a boon for solar power in the United States. The tariffs will increase the cost of solar generation, which will be passed on to utility ratepayers. Higher costs could also dampen homeowner demand for roof panels, which is likely why many Democrats yelling about Commerce’s probe come from sunny states.
It’s hard to feel sympathy for America’s solar companies, which benefit hugely from government mandates and subsidies, including a 26% federal tax credit. They have also been helped by anti-carbon policies that have caused many nuclear and fossil fuel power plants to retire prematurely and will destroy more jobs than they create.
The rapid expansion of renewables is also increasing the cost of maintaining a reliable power grid, which will increase costs for US manufacturers, making them less competitive globally. That’s why a carbon tariff, i.e. a tax on foreign imports based on CO2 emissions from where they were made, is gaining traction in Congress.
The Democrats’ solar fight illustrates how their climate obsession is leading to more trade protectionism. American consumers, workers and businesses will be the losers.
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Appeared in the print edition of May 23, 2022.