The U.S. solar industry should be on top of the world. Last year, installations nearly doubled over 2015. The industry employs more than 260,000 people — with a growth rate that puts the overall economy to shame. No one even talks about Solydra anymore, the company that took a half-billion-dollar federal loan and then went bankrupt in 2011. (The Department of Energy loan program is now firmly in the black, returning billions to taxpayers).
But, yet, somehow, trouble is a-brewin’.
Last month, Suniva, a solar panel manufacturing company that provides 21 percent of U.S.-made crystalline silicon panels, declared bankruptcy. Days later, the company, which is majority owned by a Hong Kong firm, filed a case to the International Trade Commission (ITC), a quasi-independent federal body that rules on trade violations. On Thursday, SolarWorld, another major solar panel manufacturer, joined the petition. On Friday, the company announced it would lay off 500 of its 800 Oregon factory workers.
The two companies want the government to take action against foreign companies —primarily Chinese companies — they say are exporting too many solar panel parts to the United States. Most likely, that action would be tariffs, which would in turn raise the prices of solar for businesses and homeowners.
Analysts suggest tariffs could have a major impact on the industry, decreasing expected solar installations up to 25 percent a year.
“The relief sought would be damaging to the whole solar industry,” said Abigail Ross Hopper, president and CEO of the Solar Energy Industries Association (SEIA), a D.C.-based trade association that represents the bulk of the industry. SEIA is strongly opposing the ITC complaint. On a call with reporters, Hopper said SEIA’s board voted “overwhelmingly” to oppose the filing.
“There is no job worth saving that is worth putting the other 250,000 at risk,” she said.
SolarWorld has not been a member of SEIA for years, since the company spearheaded an earlier trade suit. In 2012, the ITC, at SolarWorld’s behest, found that China had been engaged in “unfair trade practices,” dumping subsidized panels on the United States. The ITC imposed tariffs on Chinese-manufactured solar panels, which, some industry insiders argued only shifted manufacturing to offshore locations. A follow-up case dragged on for years.
“We have hoped and waited for serious proposals for settling the overall U.S. solar industry’s trade tensions with China, but we have received none,” Juergen Stein, president of SolarWorld Americas, said in a statement Thursday. “Therefore, we have decided to join the case to pursue the best remedy available to us to restore fair competition in the U.S. market.”
SolarWorld also appears to be struggling financially. Its German parent company has filed for “insolvency” and earlier this week, SolarWorld notified 800 workers in Oregon that they may be laid off. The factory is “the largest crystalline silicon manufacturing facility in the Western Hemisphere,” PV Magazine reported. According to SEIA, nearly all commercial and residential installations use this crystalline silicon technology.
Suniva has been accused of using the case as leverage over Chinese investors, since the Chinese solar industry would also be hurt by tariffs. The firm bankrolling Suniva’s complaint suggested in a letter to investors that the case would be dropped if Chinese companies bought $55 million worth of Suniva equipment, post-bankruptcy. Industry watchers have speculated that SolarWorld joined the petition to keep it going in the event that Suniva dropped out.
Either way, it’s clear there is an issue of overproduction when it comes to the manufacturing of solar panels. China’s production capacity is growing faster than its installations, Reuters reported late last year. On one hand, this is driving down costs. On the other hand, it’s pushing solar panel manufacturers into bankruptcy.
So in that sense, the new complaint is building on SolarWorld’s earlier anti-dumping case, although it uses a different mechanism. Suniva filed the case under a little-known and little-used section of the Trade Act of 1974. Section 201 allows the ITC to carry out a “safeguard” investigation, meaning there doesn’t need to be any suspicion of illegal activity. The commission just needs to find that goods “are being imported into the United States in such increased quantities as to be a substantial cause of serious injury, or the threat thereof, to the domestic industry producing an article like or directly competitive with the imported articles.”
That’s not what’s happening here, Hopper said on a call with reporters: “This case is not about foreign dumping… This case is about one company claiming it is not able to compete.” Now, of course, it is about two companies claiming they can’t compete.
Earlier this week, the commission determined there is “legal sufficiency and compliance” to the complaint and that carrying out an investigation was warranted. According to the notice, the ITC also determined the case is “extraordinarily complicated.” If it finds there has been injury, the commission will make a recommendation to President Donald Trump by November 13. He then has 30 days to take action.
“It’s a long process,” Peg O’Laughlin, press officer for the ITC, told ThinkProgress. And it is critically different than the anti-dumping case: “[An injury determination] does not require the finding of an unfair trade practice,” O’Laughlin said.
In a process already fraught with unknowns, Trump, who spent a great deal of time on the campaign trail complaining about China taking U.S. jobs, may be the greatest unknown of all.
“[Trump] has broad discretion when making that decision. He could accept the commission’s recommendation, he could alter their recommendation and impose a different kind of relief, or, in fact, he could determine that relief is not appropriate,” Hopper said.
Analysts have warned that imposing tariffs on foreign-made solar panels will dramatically reduce installations. Between 2017 and 2021, annual installation of solar PV will fall 25 percent. Cumulatively, that means overall solar installations will be about 10 percent lower than currently expected, over the longer term.
All of this is bad news for the climate, since a decline in solar power installations will slow the transition away from fossil fuel-based electricity. While wind energy will see the biggest boost from tariffs, the natural gas industry will also be positively affected.
Energy Innovation, an energy and environmental policy firm that does analysis on different cost scenarios, predicts the tariff will push the U.S. carbon footprint up.
“Regarding CO2: the tariff causes an increase of 7 million metric tons CO2 [equivalent] per year by 2030 and 19 [million metric tons] per year by 2050,” analyst Robbie Orvis told ThinkProgress in an email. “That’s equivalent to the emissions of about 1.5 million passenger cars per year in 2030 and about 4 million passenger cars per year in 2050 (based on EPA’s GHG Equivalencies Calculator).”
Energy emissions are cumulative — installing solar today rather than building more gas-fired power plants has an increasing impact over time. So while the tariffs are only expected to last four years, they will continue to affect how much solar, wind, and natural gas capacity is installed over the longer term.
Correction: An earlier version of this story incorrectly identified Abigail Ross Hopper. ThinkProgress regrets the error.