Two Solar Companies Got Big Subsidies From Obama. Now They Want Protective Tariffs From Trump.
A bankrupt Chinese-owned taxpayer-subsidized company that's asking for protection against Chinese imports.
Two bankrupt green energy companies may be given new lives, thanks to the economic protectionism in the guise of "America First."
Suniva and Solarworld, like many companies in the renewable energy industry, have received millions of taxpayer dollars in the form of grants and tax incentives over the past decade. Now, both are pinning their hopes on the Trump administration's likely move to levy heavy tariffs on foreign competitors.
Suniva received more than $20 million in tax credits before going bankrupt. SolarWorld was given over $100 million before filing for insolvency this April. But the subsidies weren't enough.
Suniva and SolarWorld recently filed a complaint with the U.S. International Trade Commission, a federal agency that investigates trade matters and handles complaints, with the aim of getting the ITC to recommend tariff duties on the cheap Chinese imports the two companies claim are hurting their bottom lines. The ITC went along with it, issuing a decision last week that said Chinese solar panels come at the expense of U.S. manufacturing jobs.
The two bankrupt companies have claimed cheap imports are harmful to America's domestic manufacturing market, something President Donald Trump declared on the campaign trail. "You take a look at China, what they have done. They have taken our money, our jobs, our base, our manufacturing." It's not hard to imagine the Trump administration seizing on the ITC ruling and imposing tariffs on Chinese solar panels in the name of protecting American manufacturing.
Which is exactly what Suniva and Solarworld want.
Needing protection from foreign competition is particularly odd in their cases because, while both companies are based in the United States, they're mostly foreign owned. SolarWorld is a branch of a German company, while Suniva is owned by Shunfeng International Clean Energy, a Chinese company, making Suniva a bankrupt Chinese-owned, taxpayer-subsidized company asking for protection from Chinese imports.
This isn't the first time these companies have turned to protectionism. As Reason's Christian Britschgi reported this past spring, SolarWorld had previously convinced the Obama administration to put a limited set of tariffs on solar imports from Chinese competitors in 2012, though then they had to at least claim that they were the victims of unfair practices. As The Wall Street Journal's editorial Board recently noted, they now only have to invoke manufacturing job loss as a reason for tariff duties.
Tax credits have been critical for the solar industry's success, particularly the federal tax credit passed in 2006. Between then and 2015, the solar industry in the United States grew at a compound rate of 76 percent, according to an industry analyst at IBISworld, a market research company. In 2016, Congress extended the tax credit to 2021, ensuring the incentive to buy solar power would continue. In 2016, 39 states had clean energy purchase requirements and 41 had net metering programs for customers to sell green energy to utilities, guaranteeing the market for solar power.
But even as solar installation jobs were booming on the back of government assistance, domestic solar panel manufactuers continued to struggle. With cheap foreign imports available, the solar industry no longer manufactures their parts in America.
Solar companies not as heavily involved in manufacturing side of the industry believe future trade restrictions will have a much wider effect than previous tariffs, based mostly on anti-dumping laws. The Solar Energy Industries Association claims it could cost as many as 88,000 jobs. The last time Section 201 was used was 2002, when the Bush administration levied tariffs on foreign steel, a decision that ultimately cost an estimated 200,000 jobs.
This might still not dissuade Trump. Given his rhetoric against China, his belief in tariffs, and the door opened by the International Trade Commission, Trump could slap the levies on solar components by early next year.