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Joe Biden, tariffs, “Whack-a-Mole” and jobs

01 December 2020 Keiron Greenhalgh

Court rulings never mention "Whack-a-Mole" or "PacMan" in the first paragraph do they? Especially those concerning import and export tariffs. But a US Court of International Trade decision did in mid-November, and it will be up to President-elect Joe Biden and his team to solve this and other knotty legacies of President Donald Trump's attritional trade policy and its impact on the renewable energy sector.

The court on 19 November allowed the reinstatement of tariffs on two-sided solar panels. Trump imposed the tariffs in 2018 as part of a broader package, then withdrew the subset in 2019, before issuing a presidential proclamation in October reimposing them as well as raising duties for certain crystalline silicon photovoltaic panels in 2021.

With Invenergy Renewables, EDF Renewables, the Solar Energy Industries Association (SEIA) and other major players facing off against the government, Judge Gary Katzmann said he couldn't allow the plaintiffs to attach their objections to the proclamation to an existing case, handing Trump - as well as US manufacturers Hanwha Q Cells and Auxin Solar - the win.

At the heart of this case though was jobs. They've been hard to come by for many in what has been an unprecedented year around the globe. They were at the heart of Biden's message for voters. They're also at the heart of the proclamations by many of the players in the multiple trade fracas Biden's predecessor in the White House whole-heartedly enjoined.

Wind tower manufacturers want tariffs on imports. As do solar cell and module manufacturers. Much of the rest of the US solar industry disagrees. Likewise many in the US wind farm installation business. All cite jobs as the basis for their stances.

In October, Abigail Ross Hopper, CEO of the SEIA, criticized the White House proclamation. "The Trump administration decision this weekend to expand solar tariffs and evaluate an extension of those tariffs counters critical needs of our country right now, jeopardizing jobs, economic recovery in the face of a pandemic and a clean environment. Aspects of this policy may also run counter to law," she said.

Her ire was directed at the plans Katzmann's ruling confirmed. Trump revoked bifacial solar panels' exclusion and raised the wider tariffs to 18% from the expected 15% in 2021, while also directing the US Trade Representative to assess whether the duties should be extended.

In a subsequent plea to Biden, the SEIA said: "As a result of the Section 201 and 301 tariffs placed on solar cells and modules, and other components and raw materials necessary for assembling solar panels, the cost of panels in the US is roughly 50% higher than the global average. There are more effective ways to stimulate manufacturing in the US than tariffs which in totality reduce solar employment and negatively impact economic development."

"Removing tariffs on clean energy equipment imports, including Section 201 and 301 tariffs, will increase solar deployment nationwide and help create jobs in all sectors of the solar value chain," the trade group said.

The SEIA disputes the use of Section 201 of the Trade Act of 1974. Trump used the rule to impose a four-year program targeting PV module imports. The tariffs started at 30% and were set to drop by 5% each year through 2021 until October. They were intended to boost US manufacturing and to lock out overseas competition, mostly from China.

Meantime, Section 301 of the same act was used to try to punish a much wider range of US imports from China. When it comes to the solar industry, the tariffs target companies that manufacture products with semiconductors from China, and that includes solar inverters and modules.

Parts of the 1974 act are not the only battleground for the solar sector though. On 16 October, the court voted to begin an investigation of certain shingled solar modules after a complaint by Solaria Corporation alleging violations of Section 337 of the Tariff Act of 1930.

Section 232

The wind industry has been just as focused on the Trade Expansion Act of 1962, specifically Section 232, which Trump used to impose a 25% tariff on steel imports and 10% tariff on aluminum arrivals on March 1, 2018.

Between 75% and 80% of a wind turbine tends to be made from steel and up to 2% from aluminum, according to the US National Renewable Energy Laboratory.

According to the world's largest steelmaker, ArcelorMittal, some 225-285 mt of steel is needed to build an average onshore wind turbine.

ArcelorMittal uses special bar quality steels for foundations, quarto or heavy plate tubular steel for turbine towers, beam for the nacelles, electrical steel for the generator, and seamless rolled ring steel for the gearbox, yaw and pitch, according to company marketing materials.

However, according to Berkeley Lab, a division of the Department of Energy, US wind towers are comprised of 65-85% domestic content.

That doesn't mean the industry wants the tariffs to remain in place. "The Section 232 tariffs have harmed US manufacturing supporting the domestic wind industry's growth," according to an American Wind Energy Association (AWEA) spokesman, who added: "AWEA would support revisiting the 232 tariffs and considering their impacts on the wind industry."

The Section 232 tariffs also affect the solar industry, with the tariffs boosting the cost of solar racking, wiring and ground-mount posts.

One subset of players in the wind industry are involved in a separate trade court battle. The Wind Tower Trade Coalition -- comprising Arcosa Wind Towers and Broadwind Towers - has won one trade case and has another under way, seeking to block imports from Canada, India, Indonesia, Malaysia, South Korea, Spain, and Vietnam across the two cases.

However, Arcosa and Broadwind are not marching in step with the sector's main trade group. "While AWEA is supportive of the US wind manufacturing industry, we are a party to the case and oppose the petition because we do not believe that relief requested by the petitioners is the right way to address their concerns or strengthen the US wind industry," AWEA said.

The US Court of International Trade - and its sway on trade flows - is also a forum for spats between turbine players. GE petitioned the court to punish Siemens Gamesa in a battle over intellectual property rights related to speed variability. GE previously tussled with the likes of Vestas, Mitsubishi Heavy Industries, Enercon, Nordex, Acciona and Senvion on a similar battleground.

The wind tower manufacturers are expecting a preliminary determination from the court on their latest case before 4 December, 2020. But final determinations by the US Department of Commerce are scheduled for March and June 2021 in the active case - after the Biden administration takes control.

AWEA wants action from Biden. "We would expect the administration to consider removing harmful trade barriers to renewable deployment that may prevent the administration from reaching its clean energy deployment goals, including revoking Section 301 (renewable components) and letting the Section 201 (solar) tariffs expire with the bifacial exclusion maintained," the spokesman said.

Promises

Biden's promises on jobs will, as he acknowledges on his transition website, only get going after he tackles the public health crisis that has blighted 2020 around the globe. But after that, the economy will be his next herculean endeavor, largely as a result of the pandemic.

Trump talked often about onshoring jobs, and Biden adopted some of the same language.

"We've seen the importance of bringing home critical supply chains so that we aren't dependent on other countries in future crises," according to Biden's transition website. It also includes a promise to "build a strong industrial base and small-business-led supply chains to retain and create millions of good-paying union jobs in manufacturing and technology across the country."

Investment in "a modern infrastructure and an equitable, clean energy future" is at the core of that vision. "We've seen the need for a more resilient economy for the long-term, and that means investing in a modern, sustainable infrastructure and sustainable engines of growth — from roads and bridges, to energy grids and schools, to universal broadband," according to the website.

Through these activities and others, Biden says he can "meet the climate crisis, build a clean energy economy, address environmental injustice, and create millions of good-paying union jobs."

US manufacturer First Solar was not part of the bifacial solar trade case, but at least one analyst downgraded its stock citing Biden's impending arrival in the White House. However, the Tempe, Arizona-based company has high hopes for 2021, tell IHS Markit: "First Solar will work with the incoming administration on advancing the growth of solar energy in the United States and support the effort to transform our country into a 'clean energy superpower.'"

"We are confident that the administration will continue longstanding, bipartisan efforts to safeguard American solar manufacturing and our nation's energy security," a spokesperson said in an email, adding: "We are also hopeful that policymakers on both sides of the aisle will be able to embrace the need for a long-term renewable energy policy that delivers the certainty required to attract investment, drive R&D, and create stable solar jobs."

But Washington's famous gridlock, as the likelihood of a Republican Party controlled Senate grows, may lead to insurmountable roadblocks to First Solar and others' hopes and Biden's promises, according to observers.

"Supporters of carbon-free energy need only to think back a few years to recognize that having friends in the White House does not mean clean energy projects will move forward at lightspeed," according to law firm Hogan Lovells.

Large swathes of Biden's plans, such as expanding tax incentives for electric vehicles, eliminating tax preferences for oil and gas production, and increased federal appropriations for clean energy investments, "cannot be achieved without congressional action, which will be difficult without strong Democratic majorities in both houses," according to a recent assessment by a team at the law firm.

The Biden transition team did not respond to a request for comment on his tariff plans.

Posted 01 December 2020 by Keiron Greenhalgh, Editor, Energy and Natural Resources Group, IHS Markit

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