The White House announced on Thursday (May 16) that it would cancel tariff exemptions on imported bifacial solar panels and make it easier for projects using American-made products to apply for subsidies, in order to protect domestic factories from competition from China.
According to the White House statement, President Biden’s “Investing in America” agenda has promoted the robust development of clean energy manufacturing and applications in the United States, aimed at reducing the country’s reliance on Chinese-manufactured goods.
The White House stated that it would soon cancel a two-year tariff exemption on imported bifacial solar panels. These panels represented only a small portion of the market when the exemption was implemented, but have since become the main technology used in utility-scale solar projects.
This move comes as President Biden prepares to go head-to-head with former President Trump in the November election, with economic policies being closely watched.
President Biden also plans to end tariff exemptions imposed on Chinese companies producing solar panels in Malaysia, Cambodia, Thailand, and Vietnam. Two years ago, Biden granted temporary exemptions at the request of American project developers who relied on cheap imported products to enhance the cost competitiveness of their facilities. However, the White House stated that since then, the American manufacturing sector has expanded, with these producers facing increased competition from Chinese solar factories that have ramped up production capacity and lowered prices.
In its statement, the White House mentioned that in 1956, the U.S. Bell Labs invented and introduced silicon solar cells, placing the United States in a leading position in solar innovation and manufacturing for decades. However, China’s anti-competitive subsidies and trade practices have decimated the U.S. solar manufacturing industry over the years.
As the White House announced the cancellation of tariff exemptions, the oversupply of clean energy technologies such as electric vehicles, solar panels, and lithium batteries in China further intensifies, posing a threat to competitive enterprises in the United States and other countries.
John Podesta, a senior advisor on Biden’s international climate policy, said in an interview, “These actions will empower domestic solar producers, but the impact of China’s oversupply on investments in the U.S. solar market remains a challenging issue.”
The White House stated that it would monitor the surge in Chinese imports and oversupply issues closely. Last year, there was a surge in solar module imports from Southeast Asia, with Chinese manufacturers found to be circumventing anti-dumping and countervailing duties and establishing new capacity in those countries to target the U.S. market. The Department of Energy and the Department of Commerce will closely monitor import patterns to ensure the U.S. market is not oversaturated and explore all available measures to address unfair practices.
The U.S. Treasury Department has also issued new regulations on how clean energy project developers can qualify for tax credits, aiming to encourage the use of American equipment.
Under Biden’s landmark Inflation Reduction Act (IRA), renewable energy facilities can receive a 30% tax credit, with a 10% domestic production incentive as a supplement to this provision.
A year ago, the Treasury Department first released guidelines for applying for incentive credits, but project developers complained that the regulations were too complex to be practical.
To qualify, IRA mandates that at least 40% of the product costs of relevant projects must be from products manufactured in the United States. These products may include solar panels, inverters, or battery packs. However, it has proven challenging to determine the labor and material costs of components manufactured by multiple suppliers, often located in different parts of the world.
Under the new rules, the Treasury Department allows project developers to use default cost percentages determined by the Department of Energy to qualify for credits.
The Treasury Department stated that it is still considering additional provisions to help offshore wind developers qualify for similar credits. Additionally, the department is evaluating incentives for the manufacturing of solar wafers (a component of solar cells).
The White House noted that since President Biden took office, companies have announced investments of over $17 billion and 335 gigawatts of production equipment across the entire solar supply chain, with announced solar investments sufficient to power 18 million households.
According to Reuters, South Korean Hanwha Group’s subsidiary Qcells is investing $2.5 billion in U.S. solar factories. The company stated that the measures from the Biden administration are “crucial to creating tens of thousands of job opportunities in the United States”.