Solar Tariffs Aid U.S. Firms, But Not the Environment
Policy + Politics

Solar Tariffs Aid U.S. Firms, But Not the Environment

Getty Images

Under fire for its proposal to force energy producers to cut their carbon emissions by 30 percent by 2030, the Obama administration made a less-noticed decision on Tuesday that favored business interests over environmental protection.

The administration announced that it would impose expensive tariffs on some solar panels being imported from China, a move that will add between 18 and 35 percent to the panels’ cost.

Related: The Real Threat to the Electrical Grid Is Not Terrorism

The move comes amid evidence that the use of solar energy in surging in the U.S.

A detailed report from the investment bank Barclays demonstrated that a combination of better battery technology and cheaper solar panels was making carbon-free electrical power cost-effective for consumers.

“In the 100+ year history of the electric utility industry, there has never before been a truly cost-competitive substitute available for grid power,” said a note written by a team of Barclays analysts, led by Yung Chuan Koh. “We believe that solar + storage could reconfigure the organization and regulation of the electric power business over the coming decade”

But the administration’s move Tuesday may have pushed that date back significantly.

“These damaging tariffs will increase costs for U.S. solar consumers and, in turn, slow the adoption of solar within the United States,” said Rhone Resch, president and CEO of the Solar Energy Industries Association, which represents, among other groups, companies that install solar panels.

Related: The Pros and Cons of Obama’s New Carbon Rule

The Commerce Department was facing a tough choice. One of the reasons solar power has seen increased uptake in the U.S. is that the start-up costs for someone looking to install solar panels on a home or business have plummeted. And one of the reasons for the price decline is that China has been “dumping” solar panels on the U.S. market.

Dumping refers to the practice of selling goods at below manufacturing costs, and is a technique typically used to capture market share and/or drive competitors out of the market entirely. Chinese solar panel firms receive government subsidies, which makes it difficult for American producers of solar equipment to compete on price.

So, while cheap solar panels from China have been a boon to the environment, as well as consumers seeking lower electricity bills and companies that install solar power systems, the competition has hindered the growth of U.S.-based solar manufacturers.

Related: Obama’s Energy Plan Is a Gift to Russia and China

On Tuesday, the Commerce Department decided in favor of the manufacturers, specifically SolarWorld Industries America, the U.S.-based subsidiary of a German firm, which filed the case with the Commerce Department’s International Trade Administration.

“Today is a strong win for the U.S. solar industry,” said Mukesh Dulani, president of SolarWorld Industries America Inc. “We look forward to the end of illegal Chinese government intervention in the U.S. solar market, and we applaud Commerce for its work that supports fair trade.”

The ruling is technically only preliminary, and will have to be made final after review. That decision is expected August 18. However, the tariffs will start being collected immediately.

Top Reads from The Fiscal Times: