Biden admin eases Trump-era solar tariffs but doesn't end them (updated)

LG

04/02/2022 13:07

(Adds reactions, background, paragraphs 4-10)
    By Jarrett Renshaw and Nichola Groom
    Feb 4 (Reuters) - U.S. President Joe Biden extended
Trump-era tariffs on imported solar energy equipment by four
years on Friday, but in a major concession to installers he also
eased the terms to exclude a panel technology dominant among big
U.S. projects.
    The decision represented a balancing act by the Biden
administration to meet the demands of two important political
constituencies: union labor which supports import restrictions
to protect domestic jobs, and clean energy developers keen to
access cheap overseas supplies.    
    The four-year extension of the tariff exempts so-called
bifacial panels, which can generate electricity on both sides
and are favored by large scale developers, according to a White
House announcement. That technology was nascent when the tariffs
were first imposed by Trump but it is now used in most large
U.S. solar facilities.
    The extension also doubles the import allowance on solar
cells - the main components of panels - to 5 gigawatts (GW)
before tariffs kick in, far more than the 2.7 GW the United
States is estimated to have imported last year, according to
energy research firm Rystad. 
    The administration also opened a pathway for duty-free
supply from neighboring Canada and Mexico, which currently
supply less than 1% of imports.
    Domestic solar manufacturers condemned the decisions to
exclude bifacial panels and to raise the cell quota, while
industry trade groups representing installers and developers
said they were pleased with those terms.
    The chief executive of Auxin Solar, a San Jose,
California-based domestic solar producer that sought an
extension of the tariffs, said the bifacial exclusion and
increased cell import allowance reduce "the value of the
safeguard to not much more than the paper it is written on."
    First Solar Inc  FSLR.O , which makes panels that compete
with bifacial technology, said the decision "effectively allows
China to outflank American efforts to grow self-reliant solar
supply chains." 
    Shares of the company, which is by far the biggest U.S.
solar manufacturer, were down 1.5% following the announcement.
    Just 1% of panels imported last year came from outside of
Asia, according to Rystad.
    The American Clean Power Association, a renewable energy
trade group, praised the administration's decision, calling it
"a win for jobs and a win for the President’s climate agenda."
    Manufacturing makes up a small portion of the solar
industry, with most of the jobs concentrated in installation and
construction. Proposed legislation that would incentivize
domestic solar manufacturing is currently stalled in Congress.
    Former President Donald Trump imposed a four-year tariff
regime on solar imports in 2018, using authority under section
201 of the 1974 trade act, in an effort to create manufacturing
jobs in the U.S. solar sector. The tariffs started at 30% and
declined to 15% in the final year.
    Bifacial panels were initially included in the Trump tariffs
but were excluded in November of last year due to litigation
stemming from a series of Trump administration reversals on the
issue.
    The tariffs had been set to expire on Feb. 6, but Auxin and
four other domestic solar manufacturers last year sought the
extension, saying their products were still unable to compete
with overseas-made goods that dominate the U.S. market. They
cited headwinds including import stockpiling by companies before
the tariffs took effect, the economic fallout of the coronavirus
pandemic, and cost inflation.
    U.S. panel manufacturing capacity has tripled over the last
four years, with companies like JinkoSolar  JKS.N , Hanwha Q
Cells and LG  003550.KS  setting up module assembly plants in
response to the tariffs. 
    However, the nation's roughly 7 GW of panel manufacturing
capacity is nowhere near enough to meet the demands of an
industry that installed more than 20 GW last year. There is
currently no U.S. solar cell production.
    Industry trade groups had argued that the continuation of
the tariffs would threaten Biden's goal to dramatically expand
clean energy and decarbonize the U.S. electricity sector by 2035
to fight climate change.    
    Most panels installed in the United States are made in Asia,
and solar companies rely on those cheap imports to compete with
energy produced from fossil fuels. 
    The U.S. International Trade Commission said in November
after a three-month review that the tariffs were still necessary
to prevent harm to the U.S. solar manufacturing industry. But
the president makes a final decision on whether to provide
relief to producers.
    "The President agreed with the determination of the U.S.
International Trade Commission and decided to extend the Section
201 Safeguards for four more years to prevent or remedy serious
injury to the U.S. solar manufacturing sector," the senior
administration official said.

 (Reporting by Jarrett Renshaw and Nichola Groom
Editing by Richard Valdmanis, Edmund Blair, Mark Potter, Frances
Kerry and Marguerita Choy)
 ((jarrett.renshaw@thomsonreuters.com; (646) 223-6193;))