Instead of increasing domestic manufacturing, America’s rush to solar fueled an import boom — one effectively subsidized by the U.S. government. While Beijing had already begun propping up its solar industry, President Obama’s 2009 stimulus delivered hundreds of millions of taxpayer dollars to foreign companies.
“Unfortunately, the Obama administration stimulus funding for solar installations primarily benefited Chinese producers who were also receiving massive grants, loans, and other government subsidies, and then dumping their product in the U.S. market,” Tim Brightbill, a partner with the law firm Wiley Rein who is representing SolarWorld Americas, told International Business Times. “The stimulus had almost no benefit for U.S. producers of solar cells and modules.”
The result is a failing American solar manufacturing sector — and diminished environmental benefits. Recent science suggests that, for as long as nine years, the carbon cost of producing and importing an Asian-made solar panel is greater than the reduction in greenhouse gas emissions that the same panel will provide on the roof of a home.
The U.S. industry’s crisis led Suniva and SolarWorld Americas, the two largest U.S. solar manufacturing companies, to file a case in April with the ITC, asking it to declare that their industry has been seriously damaged by foreign imports.
On Sept. 22, the ITC
ruled unanimously that foreign imports have injured American manufacturers. On Tuesday, the commission released its “
remedy recommendations” for President Trump, who has the power to accept or reject the recommendation by January. The four ITC commissioners laid out separate, yet similar, plans including tariffs of up to $0.35/watt on panels that would kick in after a yearly import quota had been reached and decrease over four years.
Possibly hinting at how the administration is leaning, the White House
said in a Sept. 22 statement, “The U.S. solar manufacturing sector contributes to our energy security and economic prosperity.” Axios
reported that Trump is likely to issue tariffs on solar imports.
“There is a strong economic justification and a strong environmental justification for having solar manufacturing in the market where the product will be used,” said Brightbill. “The U.S. is the second-largest solar market in the world, and solar demand is strong and growing...yet imports have taken all of that growth. It doesn’t make sense either economically or environmentally.”
Ben Bierman (R) and Chris Gronet (L) lead U.S. President Barack President Barack Obama on a tour of the Solyndra solar panel company on May 26, 2010 in Fremont, California. Obama's federal stimulus plan provided substantial loans to Solyndra, which later went bankrupt. Photo: Paul Chinn-Pool/Getty Images
An Incentive Plan — And A Loophole
Obama’s economic stimulus package was aimed, among other goals, at creating domestic jobs by helping incentivize and grow U.S. companies. Part of the $787 billion American Recovery and Reinvestment Act of 2009 — section 48C — was the Advanced Energy Manufacturing Tax Credit, a $2.3 billion program that provided a 30 percent tax credit to 183 companies investing in green energy manufacturing or energy conservation technologies.
To earn the tax credits, projects had to be based in the U.S., and a “
Buy America ” clause was included to boost domestic manufacturing. But the clause had a loophole: It would be waived if “the relevant manufactured goods are not produced in the United States in sufficient and reasonably available quantities.” Because of the relatively small solar manufacturing capacity in the U.S., domestic solar installation companies receiving stimulus money would be allowed to purchase panels from overseas, undercutting U.S. manufacturers.
But that’s not all — while roughly 70 percent of the grant recipients were American companies, there were at least 17 foreign-based companies receiving 48C tax credits that had already arranged for solar or wind manufacturing operations in low-wage nations, according to a
2010 report from a project of the BlueGreen Alliance Foundation, an environmental nonprofit. Six U.S. companies that were awarded tax credits, including First Solar and Sun Power, already had manufacturing operations in low-wage, East Asian countries such as China, Malaysia and the Philippines.
Receiving the biggest chunks of 48C stimulus funding were American manufacturers of polycrystalline-silicon, the key ingredient in most of the world’s solar cells. In January 2010, Hemlock Semiconductor Corp. was awarded $142 million in 48C tax credits to expand its polysilicon manufacturing operations in Hemlock, Tennessee, where it is based. The North American branch of the Germany-based Wacker Chemie got over
$128 million in 48C tax credits to help build a polysilicon manufacturing facility in Charleston, Tennessee. The Norwegian
REC Silicon, which has two U.S. operations, received $155 million in credits — the highest amount awarded to a 48C recipient — and
AE Polysilicon got $45 million.
Domestic polysilicon manufacturers posed another problem for the country’s solar panel producers: Both before and after receiving stimulus funds, they entered into long-term “take-or-pay” contracts with foreign, often Chinese, solar manufacturing companies. REC Silicon, for example, entered into several contracts guaranteeing sales of
polysilicon and
solar wafers — electrical components of solar cells that are made from polysilicon — at fixed prices to companies headquartered in East Asia. Hemlock entered into numerous
take-or-pay contracts with foreign solar producers in China, Japan and Germany.
Using cheap, subsidized polysilicon and polysilicon products from the U.S., along with huge subsidies and tax credits from their own government, Chinese manufacturers were able to produce solar panels at extremely low cost, allowing them to “dump” huge numbers of cheap panels into the U.S. market.
At the same time, China was expanding its polysilicon manufacturing, further reducing global prices. Oversupply of polysilicon pushed prices way down in 2011, with global pricing
falling over 60 percent. In 2012, the price continued to decline.
After the U.S. imposed tariffs on Chinese solar imports in 2012, China
responded in mid-2013 with its own steep tariffs of up to 57 percent on polysilicon imports from the U.S. This move hurt the U.S. polysilicon industry. REC Silicon’s Washington facility, for example, exported 80 percent of its polysilicon to China before the tariffs. Until September 2015, companies were able to exploit a
loophole that waived the tariffs if Chinese companies were importing the material for use in products that would then be exported. Still, U.S. companies have taken a hit.
The stimulus money wasn’t nearly enough for American solar manufacturers to weather this perfect storm. From 2011 to 2014, at least
16 domestic facilities manufacturing solar modules, cells and other components closed. In 2014, the U.S. produced a mere 2 percent of the world’s solar panels, while Asia, particularly China, made 87 percent. From 2010 to 2016, as the overall U.S. solar industry more than doubled, solar manufacturing jobs went from 27 percent of total domestic solar industry jobs
down to 15 percent. In 2016, the industry continued to increase its workers, and manufacturing employees remained at roughly
15 percent of the workforce.
I get the tax credit and all... Sucks man because its big business down here when they have the home owners conferences
this clearly needs a tweak to make it work, but its literally keeping manufacturing jobs in america that were being outsourced to china. he went to bat for american companies who asked him to
