Biden’s Bind on Solar

Kuttner on TAP: Should he go all out to support domestic manufacture, or keep the flow of solar panels coming from China?

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For the most part, the administration’s industrial-policy goals and its climate goals operate in lockstep. The strategy: bring more advanced technology and production home, the better to achieve a green-energy transition, and at the same time reduce reliance on China.

But when it comes to solar, the administration is at cross-purposes with itself. Some parts of the domestic solar industry want the administration’s help in building a truly domestic manufacturing sector, with components as well as finished panels made in USA. But other domestic producers are heavily reliant on components made in China. Then there is the solar installation industry, which wants a continuing supply of cheap panels, of which China remains the leading supplier.

Last week, the administration once again sided with the parts of the domestic industry that are cozy with Chinese suppliers, despite China’s heavy reliance on Uyghur forced labor to produce solar supplies. Despite Congress’s near-unanimous passage of the Uyghur Forced Labor Prevention Act in December 2021, Biden has done his best to help China circumvent that law.

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Both houses of Congress recently passed a joint resolution overturing an earlier Biden order delaying for two years imposition of special tariffs on Chinese solar panels diverted through Cambodia, Thailand, Malaysia, and Vietnam to disguise their true origin. But the White House quickly said that Biden would veto the bill. Score one for China and its U.S. solar allies.

Meanwhile, those American manufacturers who want to accelerate development of a true domestic solar industry criticized another Biden policy—the administration’s newly released policy on tax credits. The Treasury published guidelines Friday that said facilities assembling solar panels in the United States would qualify for an additional 10 percent tax credit, even if the silicon wafers used to make those panels were imported from foreign countries.

Mike Carr, the executive director of the Solar Energy Manufacturers for America Coalition, which includes solar companies with U.S. operations like Hemlock Semiconductor, Wacker Chemie, Qcells, and First Solar, termed the policy “a missed opportunity to build a domestic solar manufacturing supply chain.” He added that China produces 97 percent of the world’s solar wafers and that Treasury’s policy “will likely result in the scaling back of planned investments in the critical areas of solar wafer, ingot, and polysilicon production.”

Biden will face criticism no matter which course he chooses. But if he is serious about supplanting U.S. solar dependence on China, there is no substitute for accelerating domestic development of the entire solar supply chain.

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