Green Energy Industry Admits It Needs Cheap Chinese Goods To Survive

Green Energy Industry Admits It Needs Cheap Chinese Goods To Survive
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The green energy industry is scrambling as Congress pushes forward with legislation that would impose costly tariffs on Chinese solar panels, a move that industry leaders say would cripple their business given their overwhelming reliance on cheap Chinese suppliers.

The House on Friday passed a bipartisan bill to restore tariffs on Chinese solar panels sold out of Southeast Asia, tariffs that President Joe Biden suspended last year in an attempt to “satisfy the demand for reliable and clean energy.” The legislation has already garnered support among some Senate Democrats, reflecting s significant possibility that the bill will become law.

For the green energy industry, that possibility marks a full-blown disaster.

China controls more than 80 percent of the world’s solar panel production, a figure that hasn’t waned as Biden spends hundreds of billions of dollars on green energy subsidies intended to give the United States the ability to “compete with China.” Instead, U.S. solar companies have been flooded with increased demand and have turned to China to satisfy it. A reimposition of Chinese solar tariffs would cost U.S. developers at least $1 billion in retroactive fees, prompting solar executives and trade groups to publicly stress their need to maintain a free flow of cheap Chinese goods.

The Solar Energy Industries Association, for example, admitted in a Friday statement that the United States “cannot produce enough solar panels and cells to meet demand.” The American Council on Renewable Energy similarly said Chinese tariffs “would have a devastating impact on U.S. solar deployment.” Solar energy contractor George Hershman, meanwhile, said tariffs would prompt him to lay off “thousands of people,” given the hundreds of millions of dollars in projects that his company, SOLV Energy, has fulfilled using Chinese goods. “I don’t know why anyone would support this,” Hershman told the Washington Post.

But for many congressional Democrats and Republicans, the reasoning for renewed tariffs is clear. China has for years provided illegal subsidies to its solar energy companies, allowing them to undercut U.S. competitors. When the United States imposed tariffs on Chinese solar companies to combat those illegal practices, China got around the tariffs by shipping its products through a handful of nations in Southeast Asia, including Cambodia, Malaysia, and Vietnam. Tariffs on Chinese goods sold out of those countries, then, allow U.S. solar manufacturers to compete with “cheap, unfairly subsidized imports,” an argument that both Missouri Republican congressman Jason Smith and Ohio Democratic senator Sherrod Brown have made in recent days.

For the Biden administration, however, the desire to transition to green energy has outweighed any appetite to combat China. Last summer, as Biden’s Commerce Department investigated whether Chinese solar companies dodged U.S. tariffs by routing their operations through Southeast Asia, Biden issued an executive order delaying tariffs on Chinese solar products sold in the region for two years. Biden held firm on that delay even as his Commerce Department determined months later that China’s solar industry indeed did dodge U.S. tariffs through its work in Southeast Asia. Ensuring a steady supply of solar panels, the White House said in a June 2022 fact sheet, was simply too important to risk.

“We need to boost short-term solar panel supply to support construction projects in the United States right now,” read the fact sheet announcing the delay. “Grid operators around the country are relying on planned solar projects to come online to ensure there is sufficient power to meet demand.”

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