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[Editor's note: This story originally was published by Real Clear Investigations.]
By Steve Miller
Real Clear Investigations
Publicly, big solar developers and many climate change activists are sounding the alarm about an ongoing probe of trade abuses by Chinese manufacturers.
Abigail Ross Hopper, CEO of the Solar Energy Industries Association, last month described the U.S. Department of Commerce investigation as “the most serious crisis we have faced in our collective history.”
Heather Zichal, a former White House energy adviser under President Barack Obama, said the examination of China’s trade practices “drives a stake through the heart of planned solar projects.”
The New York Times reported last month that the “solar industry is 'frozen’ as Biden administration investigates China” over allegations solar producers there are offshoring work to avoid tariffs.
But CEOs of some of the biggest solar players in the U.S. tell a different story to investors and followers, according to a RealClearInvestigations review of earnings call transcripts and solar project plans.
Amazon last month announced 37 new solar projects around the world, including in the U.S., while power plant developer Seaboard Solar announced it is working on multiple projects in New York state. A $75 million project is moving ahead in Minnesota, while two plants by Dominion Energy are starting construction in Virginia this year.
Kirk Crews, CFO of NextEra Energy, which trumpets itself as the world’s largest producer of wind and solar energy, told Bloomberg that if the investigation found that China circumvented tariffs by offshoring, “it would be unwinding a decade of trade practice.”
But Crews told analysts in an April investor call that despite the federal investigation, “we remain comfortable with our current development expectations for wind, solar and storage.”
Several other major solar producers also have announced they are moving ahead on projects this year, including Duke Energy and SOLV Energy.
“Even with trade cases, solar demand has continued to grow -- Solar jobs are still expanding,” said Tim Brightbill, a Washington, D.C.-based lawyer for domestic solar producers whose complaint last year also alleged China was avoiding tariffs.
The disconnect between public and private words and deeds illustrates a solar industry that presents itself as on a progressive mission to save the planet actually behaving more like a traditional big business. It is managing expectations in the political and business arenas through messaging geared to those separate audiences. Behind the words is a highly competitive business focused on keeping costs low -- even if that means sourcing cheaper materials from Chinese companies, some of which are accused of relying on highly polluting coal power, using slave labor, or violating trade agreements.
The Commerce Department launched its probe in response to a petition filed in February by a U.S. competitor to Chinese producers, Auxin Solar, a small California-based solar parts maker, which alleged that China was avoiding tariffs by routing its production through four Southeast Asian countries.
Auxin alleges that manufacturers in those four countries – Thailand, Vietnam, Malaysia, and Cambodia – are Chinese enterprises that use the factories for panel assembly, the last step before shipment and installation. Plants in those countries “use affiliated Chinese input suppliers and a fully integrated Chinese supply chain to circumvent the existing [tariffs],” according to Auxin’s complaint.
The complaint maps the alleged movement of solar parts to the four countries from China, as direct imports of Chinese solar parts to the U.S. have dipped over the last three years while increasing from the four Southeast Asian countries.
It cites one Vietnamese company, Boviet Solar, a subsidiary of Chinese company Boway, which noted on its website in 2017 that its attractiveness to solar producers is that “Vietnam is not a U.S. listed anti-dumping and countervailing region. No tariffs influence Boviet’s U.S. business, and those cost-savings ultimately trickle down to the buyer.”
U.S. companies produced a record number of panels in 2020, up 24% over 2019, according to a report from the National Renewable Energy Laboratory. Roughly 80% of the components and equipment for those panels come from Chinese-linked operations.
“The discourse of cheapness dominates everything now in solar,” said Dustin Mulvaney, a professor in the Environmental Studies Department at San José State University, who studies solar power commodity supply chains. Mulvaney said there is no way to police the supply chain, as components needed to build panels are integrated into the system. The origin of the components, he said, is hard to trace.
The major area of concern is the Chinese region of Xinjiang, one of the world’s leading production and mining hubs for solar, where the gross domestic product has doubled since 2012, despite being accused by several countries of using forced labor. The Chinese government has denied the accusation.
A 2021 report by Horizon Advisory, a geopolitical consultancy, names Chinese solar firms Daqo New Energy, East Hope Group, GCL-Poly, and Jinko Solar among the companies in the Xinjiang region using forced labor, which the companies deny. An estimated 45% of polysilicon, a key component of solar panels, is produced in Xinjiang.
Products made with forced labor are banned in the U.S., and some U.S. solar companies have further signed a non-binding pledge to avoid factories known to use forced labor.
But sidestepping human rights concerns, the Solar Energy Industries Association, the national nonprofit trade association of the solar energy industry in the United States, asked its members in April to sign a petition against Auxin’s complaint, warning “there is not sufficient capacity to meet U.S. demand anywhere else in the world except China.” The association claims that investigating the complaint “will also make it impossible to meet President Biden’s climate goals,” which include making 40% of the U.S. power supply solar powered by 2035.
The Biden administration is caught between the statutory duty of the Commerce Department to investigate possible tariff circumvention and its stated imperative of growing the solar industry, an urgency heightened by renewable energy mandates in 38 states, including 12 that require 100% clean energy by 2050.
If the industry has its way, China will play a large role in achieving such goals – however environmentally unfriendly the process may be. Last year, China announced plans to construct 43 new coal plants, in part to meet the demand for more panels.
“The amount of fossil fuel energy it takes to get materials from China is already high,” said Tom Beline, an attorney who is representing Auxin in its complaint. “These parts are produced using coal plants, using international freight that also uses fossil fuels. By the time the parts arrive here in the U.S., the carbon footprint is enormous.”
Solar tariffs on China were first imposed in 2012 after the Commerce Department determined the country was “dumping” government-subsidized parts on the U.S. market. In 2018, President Trump imposed heavier tariffs on specific types of solar products.
Auxin’s complaint of Chinese meddling has been met with an avalanche of online comments and phone calls, many of them threatening a boycott of the small producer and almost all of them besmirching the company.
“Shame on you for endangering the jobs of hundreds of thousands of Americans, and for attempting to cripple the future of green energy infrastructure,” one Google review post reads.
The petition from Auxin threatens one of the few sectors that has thrived in the past two years, said John Miggins, who founded Harvest Solar Energy in Tulsa, Oklahoma, in 2002, doing mostly home installations.
“The big picture is that we need solar,” Miggins said. He said his prices have increased, although record inflation has played the largest part in that. He echoed the solar industry’s response to the Auxin complaint, saying it will make things tougher to accomplish the build-in-a-hurry goal of the Biden administration.
“The end result is that it’s going to slow down people getting their own power system,” Miggins said.
Solar advocates in the past have advocated completely abolishing tariffs on solar parts from China, claiming “tariffs are ineffective at growing solar manufacturing capacity.” Sen. Jacky Rosen, a Nevada Democrat, in February introduced a bill to repeal the Trump-era tariffs. The bill has not moved since its introduction.
The U.S. solar industry can move forward without China, Tracy Stone-Manning, director of the Bureau of Land Management, told NBC News in April.
“I have incredible faith in American ingenuity,” said Stone-Manning, whose agency manages thousands of Southwest desert acres being developed for solar power plants. “If we have to, we’ll start building the solar panels here.”
[Editor's note: This story originally was published by Real Clear Investigations.]
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