Photo Credit: SolarWorld Americas
Opponents of the Suniva-SolarWorld trade case have a new, and perhaps surprising, set of allies: conservative policy groups.
The Heritage Foundation and the American Legislative Exchange Council (ALEC) have come out against the recent petition to impose tariffs on imported crystalline silicon solar products, joining in a coalition with the Solar Energy Industries Association (SEIA) and others. Mounting dissent from across the political spectrum could help convince Republican President Donald Trump to refuse the introduction of trade barriers.
The Energy Trade Action Coalition (ETAC) officially launched on Friday to coordinate opposition to the trade case. Financially troubled U.S.-based solar product manufacturers Suniva and SolarWorld launched the dispute this spring, claiming that imported solar equipment has "heavily distorted" the market and caused "significant harm" to America's solar manufacturing base.
The case was filed with the U.S. International Trade Commission (ITC) under Section 201 of the 1974 Trade Act, which is an obscure section of U.S. trade law that could allow the president to impose tariffs, minimum prices or quotas on solar products from any country in the world if the ITC finds "serious injury."
The petition specifically seeks duties of 40 cents per watt on imported cells and a floor price of 78 cents per watt on modules, which could be devastating to the broader U.S. solar industry. Implementing these tariffs is projected to erase one-half of all solar installations expected to come on-line through 2022, according to GTM Research.
The ITC agreed to take up the case in May, and is expected to issue a recommendation in September. That proposal then goes to President Trump -- who has repeatedly said that he intends to bring back U.S. manufacturing jobs -- to accept, change or reject the recommended remedy.
ETAC said its mission is to "actively engage with the Trump administration, Congress, the media and the public to raise awareness of the importance of maintaining access to globally priced products to support American energy industry competitiveness, sustain tens of thousands of good-paying American manufacturing jobs, and preserve the principles of free trade in a global marketplace," according to a press release.
The coalition includes a variety of trade associations, companies and organizations, representing utilities, co-ops, manufacturers, suppliers, solar developers, retailers, local union workers, small businesses, venture capital groups and conservative free-trade advocates. It's that final category of participants that could raise some eyebrows.
"The worst kind of trade protectionism"
The Heritage Foundation is not widely thought of as a solar advocate. The organization has argued for letting the solar Investment Tax Credit expire, criticized U.S. military investments in solar power, and applauded Trump's decision to withdraw from the Paris climate accord, which could slow the adoption of renewables in the long term. The conservative policy think tank has received funding from organizations tied to the Koch brothers, who have strong financial ties to the fossil fuel industry and have been accused of lobbying against rooftop solar.
The Koch brothers are also backers of ALEC, a nonprofit organization of conservative state legislators and private-sector representatives, which has opposed state-level renewable energy standards and helped craft policies that make residential solar less attractive. However, ALEC is also a member of the new coalition opposing the Suniva and SolarWorld trade case.
Implementing tariffs on imported solar equipment would likely slash demand for new projects and make solar less competitive with other sources of power. So it would make sense that groups that have traditionally supported fossil fuels would support the trade petition. However, right-leaning members of ETAC say they're predominantly concerned about protectionist measures and the damage they will cause to one of America's high-tech growth industries.
“The Section 201 solar industry trade case will undermine one of the fastest-growing All of the Above Energy jobs sectors in states across the country, solar energy installation,” said Sarah Hunt, director of the Center for Innovation and Technology at ALEC, in a statement. “We must avoid rewarding this opportunistic use of U.S. trade laws."
“Tariffs meant to protect one industry can, and often do, have significant damaging effects on other domestic industries,” said Tori Whiting, research associate at The Heritage Foundation. “Imposing tariffs under Section 201, as Suniva and SolarWorld request, would be a step backward by adding another layer of federal subsidies, which is something the Heritage Foundation opposes in all instances.”
The R Street Institute, a free-market think tank, also joined ETAC. Eli Lehrer, the group's president, said the solar case is "an example of the worst kind of trade protectionism." Washington, D.C.-based R Street broke off from The Heartland Institute in 2012, after the Chicago-based group ran a provocative billboard that portrayed people who believe in global warming as being psychologically equivalent to the Unabomber.
When asked why certain conservative groups had joined the effort to oppose solar tariffs, ETAC spokesperson George Felcyn said it comes down to the effects on the broader economy.
"It’s fairly common in these types of coalitions that members may disagree on some issues, but are unified on the focus of the coalition," he said. "I’ll let the individual groups speak for themselves on support for energy, but what unites everyone is a belief in free trade and an understanding that unfairly imposing tariffs on imports invariably creates significant damaging effects on downstream domestic industries."
"This is not a partisan issue"
ETAC says the requested tariffs would double the price of basic ingredients used by the broader solar industry. The $23 billion U.S. solar industry employs roughly 260,000 American workers in solidly compensated jobs across the country. A recent study by SEIA found that an estimated 88,000 jobs, about one-third of the current American solar workforce, would be lost if the trade protections proposed in the petition are granted.
The two companies at the center of the ITC case employ approximately 1,000 people in the U.S. That number has been declining recently as the companies have dealt with major losses. Georgia-based solar manufacturer Suniva filed for bankruptcy protection in April, and SolarWorld Americas narrowly escaped a similar fate with a recent $6 million cash infusion.
The two companies, both of which have foreign parent companies, do offer manufacturing jobs -- the kind of jobs the Trump administration has sworn to protect, which has created a lot of uncertainty around the trade war. When asked how ETAC views this issue, Felcyn said the coalition believes that combating the tariffs will actually boost U.S. manufacturing.
"There are many more U.S. manufacturing companies and jobs that are threatened by cutting off the basic inputs needed by the industry that are at stake here," he said. "It’s critical to look at the supply chain as a whole and consider all the other companies that depend on these inputs."
He added that there are more than 35,000 solar manufacturing jobs covering everything from racking and mounting products to inverters and trackers that are made in the U.S. "So the effects on U.S. manufacturing speak for themselves," Felcyn said.
SEIA is spearheading the fight against new import tariffs and is also a member of ETAC. Dan Whitten, vice president of communications, said this issue is not about politics.
“SEIA has been vehemently opposed to this petition from the beginning, and we know there are a lot of other organizations and industries that have similar beliefs about this case," he said in an emailed statement. "This coalition provides a coordinated platform for groups to come together to voice concerns about the harm this could cause to the more than 260,000 Americans working in solar today. This is not a partisan issue. The damages that would result if this petition prevails would be widespread.”
The utility-scale solar sector would be especially hard-hit if Suniva and SolarWorld win. Ben Gallagher, a solar analyst with GTM Research, said the tariffs would increase U.S. utility single-axis tracking system pricing from $1.08/Wdc to $1.56/Wdc, "which is...more or less 2015 system pricing." Former SEIA President and CEO Rhone Resch recently told reporters that utility-scale PPA prices would double, triggering "several [gigawatts' worth] of potential demand erosion."
The utility-scale market, which has driven the industry's growth to date, would also see significant job losses, by SEIA's calculations. The number of jobs in the utility-scale solar space is projected to shrink by 60 percent, while residential and commercial employment would fall by 44 percent and 46 percent, respectively.
American utilities are procuring increasing amounts of solar energy thanks to rapid cost declines, and utility executives are (or at least they were) bullish on solar's future. Koch Industries, as a major player in the energy space, has ties to utilities, which may be another reason why certain conservative groups have joined the solar dispute. Meanwhile, renewable energy continues to poll well among American voters from across the political spectrum.