Biden administration should chart strategy for US solar
The move by the Biden administration to intervene in a dispute over tariffs on solar parts from Southeast Asia poses a key question: what is our long-term strategy for promoting the buildout of zero- and low-carbon resources domestically, while ensuring U.S. manufacturers are a dominant global player in the clean energy transition?
To recap: U.S. solar manufacturers believe Cambodia, Malaysia, Thailand, and Vietnam are helping China to circumvent U.S. tariffs on solar equipment, spurring a Department of Commerce investigation. U.S. solar installers blamed the investigation for jamming up solar supply chains, placing a cloud over renewable energy projects across the country.
In an attempt to appease both sides, the Biden administration this month invoked the Defense Production Act to stimulate domestic manufacturing of clean energy equipment — and issued a two-year reprieve from new solar tariffs on the four countries. The solution was applauded by installers yet felt like less than a half-measure for domestic manufacturers.
China is almost certainly gaming the system. Southeast Asian countries rely heavily on upstream components from China to manufacture solar cells that they then export to the U.S. At the same time, China’s solar industry has been dogged by accusations of human rights abuses, including forced labor. And its product is far more carbon intensive than the solar panels we make in the U.S.
Even setting aside China’s problematic labor practices, it is contrary to our national interests to rely so heavily on a single country for the bulk of solar components needed to decarbonize the U.S. power sector. Consider that China now produces more than 80 percent of all solar-grade polysilicon produced worldwide — and does so with more than twice the emissions of manufacturers in the U.S. or Europe. It is counterproductive to allow such a carbon-intensive producer to advance its stranglehold on an industry that is essential for decarbonizing the globe.
The U.S. leads the world in innovative thin-film solar panels that generate 90 percent less greenhouse gas emissions during their manufacture than the silicon-based panels in which China specializes. Because the U.S. has no comprehensive federal level climate policy, the U.S. does not recognize or reward these innovative domestic manufacturers. Rather, we perpetuate our dependency on the Chinese solar industry.
The administration now has an opportunity to chart a longer-term strategy that fulfills its ambition to decarbonize the U.S. power sector while positioning the U.S. to become a solar manufacturing leader. Such a strategy must enhance the competitiveness of our cleaner domestic manufacturers, incentivize the installation of panels with lower carbon intensity, and ensure there is adequate supply of panels to meet U.S. demand.
Thoughtful trade policy would reward cleaner production throughout the solar supply chain by accounting for the carbon intensity of imports. This wouldn’t close the door to panels made with higher carbon intensity but would send a market signal to preference panels made with less carbon—something we should be exploring in other industries as well. In doing so, we would give a well-earned competitive edge to our cleaner domestic manufacturers without jeopardizing supply chains.
Longer-term, such an approach can position the U.S. to become a dominant player in next-generation solar. Other countries have started to explore how to preference low-carbon panels with some success, and we might heed their example.
Taking it a step further, the administration could partner with like-minded countries to prioritize trade in low-carbon panels, similar to the agreement the U.S. is negotiating with the European Union on steel. Such a “club” approach offers a huge environmental upside. On a global scale, cleaner production of solar energy infrastructure has the potential to avoid 2 billion tons of carbon emissions over the next ten years, according to the Ultra-Low Carbon Solar Alliance. Introducing incentives for lower-carbon intensity solar panels would also create global demand for U.S.-made solar panels and new opportunities for export.
The Biden administration has an opportunity to harness trade policy to accelerate the build out of clean energy while rewarding the use of lower-carbon panels and the U.S. companies that make them. This is how it can deliver a win — ]not just for solar installers or solar manufacturers — but for the climate.
Greg Bertelsen is CEO of the Climate Leadership Council.