The Commerce Department Can Champion or Choke the American Solar Industry With Inquiry Decision
On March 28 2022, the U.S. Department of Commerce’s Secretary Gina Raimondo initiated an anti-circumvention case that immediately and effectively levies unknown tariffs on solar module parts from trading partners that supply a majority of the modules for American solar projects, upending precedent and causing significant project delays and cancellations in the domestic utility-scale solar sector.
The U.S. Department of Commerce has chosen to investigate one rogue solar firm’s disingenuous complaint that the rest of the American solar industry is circumventing trade law. During the review of this egregious petition, retroactive tariffs of an undetermined amount are effectively applied to the majority of America’s solar module supply — artificially raising the total cost of domestic solar projects to a level that essentially freezes project construction.
The rest of America pays the price for the petitioner’s gain in the form of higher electricity bills during a time of high inflation, fewer middle-class clean energy jobs, furloughed jobs throughout the solar sector, greater dependence on foreign fossil fuels supplied by autocratic nations, and a more polluted planet. The Commerce Department rejected a similar petition last year and should follow its own precedent by moving swiftly to signal a negative preliminary determination on this petition.
President Biden and Commerce Secretary Gina Raimondo still have the power to recognize the petition for what it is — an effort at gaming the system — and issue a negative ruling, becoming champions for American solar energy production, the middle-class jobs those domestic energy investments create, and the planet we seek to preserve. However, initiating the investigation alone is expected to restrict solar deployment to levels less than what was achieved under the Trump administration.
Domestic solar projects are made up of many parts: the people, infrastructure, intellectual property, supporting services, and the component inputs necessary to make the projects real. The petition before the Commerce Department alleges that the manufacturing of solar cells and modules in allied trading nations, a critical link in the supply chain, is a minor processing step that adds little value to the final product and is used as a gimmick without any real investment in those countries. But that is blatantly wrong. Manufacturing solar cells and modules takes a raw input and transforms it into technology that can convert the power of the sun into electricity. It requires significant intellectual property and investment to make possible and provides real benefit for our allied trading partners and their people, as our allied partners themselves have told the agency.
The 35,000 people employed in American solar manufacturing jobs recognize and appreciate the work their partners in allied economies put into the inputs that make their careers possible. They know that without those inputs, the jobs here in domestic module assembly plants and the American facilities making other solar components like trackers and racking would disappear. That is why the petitioner lacks support from any other domestic producer, and why the three largest module manufacturing companies in the United States are openly opposed to the petition. The tariffs considered in this petition, effectively levied until the case is decided, shrink the necessary domestic supply chains and base of domestic manufacturing jobs that we need to foster.
Beyond the American jobs that the petition threatens directly, a decision in the petitioner’s favor would come with real costs for the more than 230,000 Americans employed in the solar industry that work in careers like installation, construction, and operations and maintenance. Without a supply of modules, project construction grinds to a halt for several planned projects in 2022 and American workers who are today looking forward to a middle-class future risk being laid-off or furloughed.
The Department of Commerce has set a decade of precedent recognizing that the manufacturing of solar cells constitutes a major transformation and is the step that determines the country of origin for a solar module. Accepting the petition has put precedent into question and has an immediate and devastating impact. The associated regulations require companies to begin setting aside cash deposits to plan for potential tariffs of unknown amounts on their materials while the multi-month process of investigation takes place. The impact that this uncertainty has on investment and new projects is devastating, as U.S. clean energy businesses can no longer rely on the decade-old Commerce Department interpretation of law.
In the solar industry, this point is as — if not more — important than in others because we are working to transition over a hundred years of fossil fuel dependency toward domestic clean sources of energy, and that requires massive capital investments and massive investments in intellectual property. Accepting this petition undermines the confidence of investors in the sector and hinders the development of our ability to invest in a cleaner American future, building communities from the bottom up and middle out.
The Commerce Department must move quickly to issue a negative preliminary determination to remain champions for the U.S. solar sector. Contact Secretary Gina Raimondo and urge the Commerce Department to issue an expedited negative preliminary determination in this case.