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.