US government pauses new solar tariffs for two years – pv magazine International
From pv magazine USA
The Biden administration is preparing to announce a 24-month tariff exemption for solar panels made in Cambodia, Malaysia, Thailand and Vietnam, according to reports first announced by Reuters.
The move is in direct response to industry-wide uncertainty that has developed since the Department of Commerce (DOC) announced March 28 that it would respond to a petition by California solar panel maker Auxin Solar asking the DOC to close solar panels review imports from Chinese companies operating in Cambodia, Malaysia, Thailand and Vietnam and announce that it will open an anti-dumping investigation against these companies.
President Biden will reportedly invoke the Defense Production Act alongside the moratorium on new tariffs to speed up American manufacturing across the solar supply chain and reduce overall reliance on imported PV hardware and materials. According to reports, the aim of availing the law is to increase domestic solar production capacity to 22.5 GW by 2024.
The Defense Production Act, enacted in 1950, allows the President to direct private companies to prioritize federal government contracts and provide materials, services, and facilities for the purposes of national defense. The order has been invoked twice since early 2020, once by then-President Donald Trump and again by Biden in response to the Covid-19 pandemic.
Invoking the law will not end the DOC investigation, which is expected to continue, meaning tariffs could be imposed even after the moratorium, depending on the DOC’s decision. However, according to Reuter’s unnamed source, the upcoming measure would eliminate the possible imposition of a retrospective tariff collection, which could have gone back to the date of Auxin Solar’s original application.
In the months following the announcement of the investigation, the Solar Energy Industries Association (SEIA) lowered its forecasts for 2022 and 2023 solar installations by 46% and predicted that the fall would result in a 24 GW drop in projected solar capacity from a year earlier next two years more solar than the industry installed in all of 2021.
Developers in the US have already felt the sting of the probe, which has frozen module imports and left solar projects in the development and construction stages, with some partially completed projects lying in the field awaiting modules.
According to the most recent release of SEIA’s Investigation Impact Survey, with over 700 responses as of April 26, 83% of respondents who purchase or use modules reported cancellations or delays in their module supply contracts. In 13 states, 100% of respondents reported being affected by delayed or canceled module shipments.
Based on voluntary reporting, responses to SEIA have outlined that a total of 318 utility-scale projects with 51 GW of solar capacity and 6 GWh of attached battery storage will be canceled or delayed. In addition, a large percentage of delayed projects could move into the cancellation zone because developers don’t know when they might be able to get modules, and some delays can drag on until the project fails.
With surveyed data from 39 states, all but two of those states are reporting project cancellations and delays in the supply area with capacity greater than 100 MW. SEIA advises that these numbers likely represent only a fraction of the true impact of the investigation. Across the US, 42% of the known utility-scale solar development pipeline has been disrupted. Both Indiana and Idaho reported that 100% of both states’ known pipelines were disrupted.
With such a loss of capacity, SEIA estimated that the United States would emit an additional 364 million tons of carbon by 2035, missing the opportunity to effectively take 78 million internal combustion engine vehicles off the road.
These predictions are based on assumptions of a positive investigation decision, with duties in the range of 50% to 250% being imposed; severely restricted module import supply from the countries named in the study, with manufacturers in countries not named taking time to close the gap; and the updated results of the impact assessment.
Cambodia, Malaysia, Thailand and Vietnam currently account for around 80% of US module imports.
Since announcing the probe, the Biden administration has been stuck between a rock and a hard place, falling short of Biden’s goals to decarbonize the U.S. power grid by 2035 and cut national greenhouse gas emissions by 50% to 52% by 2030 from 2005 levels , against existing political pressure to oppose Chinese economic practices and product dependency.
Both the DOC and the Biden administration have been inundated with pleas from renewable energy advocates and politicians alike to drop the investigation. So far, 22 senators and 19 state governors have formally requested the DOC to deliver an expedited negative preliminary ruling.
At the other end of the spectrum, U.S. Senators Sherrod Brown (D-OH) and Bob Casey (D-PA) along with U.S. Representative Marcy Kaptur (D-OH-9) sent a letter to President Biden on May 26 Expressing support for the continuation of the investigation.
According to Abigail Ross Hopper, SEIA President and CEO, the investigation was also expected to result in the loss of 100,000 jobs across the solar industry. It is important to clarify that the figure of 100,000 jobs lost also includes new jobs that were not created, although SEIA claims that the vast majority would be layoffs of existing workers. 16,000 to 18,000 solar manufacturing jobs would not be realized between 2022 and 2023 due to the imposition of tariffs, most of which would be layoffs. For comparison, in 2020, the most recent year for which survey data is available, around 31,000 people were employed in solar manufacturing.
PV Magazine will continue to update this story as it develops.
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