Just when you thought a modicum of stability was set for the solar industry, the U.S. government celebrated Earth Week with a seismic decision: The House Ways and Means Committee approved legislation to repeal the two-year moratorium for new solar tariffs the Biden administration put in place in June 2022.
This new legislation invokes the Congressional Review Act (CRA) to repeal the moratorium, and now moves to a vote by the House of Representatives. If this passes, suddenly, solar businesses that were moving forward under one agreed upon set of rules may need to pay more than $1 billion in retroactive duties.
Why the moratorium matters | President Biden issued this executive action in response to a near complete shutdown of solar deployment in the United States caused by Auxin’s antidumping duty (AD) and countervailing duty (CVD) case regarding solar cells and modules from Cambodia, Malaysia, Thailand and Vietnam. The U.S. Department of Commerce issued a determination of circumvention in that case on December 2022.
The theory behind the AD/CVD tariffs is that they will level the playing field for U.S. solar manufacturing. The issue, currently, is domestic solar module manufacturing capacity is not yet ready to meet U.S. demand. That will change in the next few years thanks to the incentives in the Inflation Reduction Act — SEIA counts 47 GW set to come online tied directly to the IRA, or five times what could be produced in 2022.
And that is why the two-year pause in tariffs was deemed necessary. When the Auxin case was first taken up by Commerce, nearly 75% of domestic solar projects experienced cancellations or delays as a result. The tariff moratorium was a bridge to keep the solar industry moving as global supply chains got sorted out and manufacturing came online, and the solar industry proceeded as such.
This move would undo all of that.
Reactions | Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association (SEIA), put it like this:
“Terminating the president’s two-year reprieve from the meritless Auxin Solar tariffs will kill demand for these investments and spark upheaval in the solar industry. The United States currently lacks the capacity to produce solar panels and cells in adequate volumes to meet domestic demand. The two-year duty moratorium allows planned solar installations to move forward while we scale domestic manufacturing in the near-term. This strategic approach protects existing jobs while new ones are added, but it also helps sustain the robust environmental, national security and job-creating benefits offered by U.S. solar deployment.”
Until there is a vote, the solar industry is back to a grinding halt.
Analysis from SEIA shows that passing this CRA legislation will eliminate 30,000 American jobs, including 4,000 manufacturing jobs. It will cause the cancellation of 4 GW of solar project deployment in 2023 worth more than $4.2 billion in investment. This lost deployment represents 14% of expected solar installations this year and will increase carbon emissions from the power sector by 24 million metric tons.
More than 400 companies across the solar value chain sent a letter to Congress earlier this week to explain the impact that this sudden retroactive move would have on the industry.
The letter emphasizes the need to grow domestic manufacturing and reduce reliance on imports but urges lawmakers to not undermine the very legislation that is positioning America as a solar manufacturing powerhouse.
“This misguided resolution would stall America’s clean energy progress and put thousands of construction jobs at risk,” said George Hershman, CEO of SOLV Energy and chair of SEIA’s board of directors. “The President’s action to provide business certainty with a pause on tariffs while the supply chain shifts, combined with the historic investments in the Inflation Reduction Act, has enabled solar companies to hire more workers and greenlight projects while the U.S. scales up its manufacturing capacity here at home. Ending the two-year reprieve would effectively halt our momentum and undercut American growth in this industry. We need Congress to stand with solar job creators and reject this dangerous effort.”
The tariff moratorium provided a measure a certainty for solar developers, and this legislation would undo their progress.
“Since the announcement of the two-year pause on solar tariffs and the passage of the Inflation Reduction Act, we’ve seen a huge uptick in the development of American solar manufacturing facilities,” said Chad Farrell, co-CEO and founder of Encore Renewable Energy. “The administration’s action provided our company with the certainty needed to continue to build solar projects while providing an important bridge for domestic manufacturing to scale. Our lawmakers should oppose the efforts presented by the Congressional Review Act that will not only halt our progress to date but jeopardize our ability to compete with other nations for climate economy leadership and to do our part in addressing the global climate crisis.”
— Solar Builder magazine