Here Comes the...Shade?
Auxin Solar is a small company based out of San Jose specializing in manufacturing solar panels using ‘Original Equipment’. They’ve been in business since 2008 and boast being 100% US owned. Their mission statement, to “Create American Manufacturing Jobs”, is simple yet telling (1).
In February, Auxin filed a petition with the Department of Commerce (‘DoC’) against Chinese manufacturers of solar panels. It claims that companies in China are outsourcing their production lines to Southeast Asia to avoid paying tariffs on exports overseas. Auxin asked the department to review imports of solar panels from Cambodia, Malaysia, Thailand, and Vietnam (2).
Back in 2012, the DoC imposed tariffs on the import of Chinese solar cells, ranging from 23 – 35%. These were in response to complaints that Chinese manufacturers were using forced labor to dump cheap cells onto US markets. American Manufacturers couldn’t compete (3).
Yet rather than leveling the playing field, these tariffs lead to a major shift in production from China to Southeast Asia. Since 2012, imports of solar panels from China are down 86%, but imports of panels from Southeast Asia are up an astonishing 886% (4).
A large number of solar companies and lobbyists responded to Auxin's petition saying that the claims were ‘seriously flawed’. One manufacturer, Silfab Solar said the inquiry would cause “severe harm to an already precarious US solar supply chain.” (5).
George Hershman is CEO of SOLV energy, a company that installs solar panels at ‘utility scale’. In addition to echoing the sentiment of others, he notes that the last petition of this sort delayed ‘clean energy projects across the country’. In his estimates, 80% of the country’s supply of panels would be affected by any shift in policy. Nearly all responses to the Auxin petition were negative (2).
Clearly, it would require a reversal of nearly a decade of solar trade policy, one which industry lobbyists have spent large sums of money to prevent. If the review passes and the DoC gets tougher on outsourcing, the solar industry will be met with a reckoning. But with so much capital on one side of the equation, it’s going to be difficult for Auxin’s complaint to lead to action.
There are some signs of promise for the passionate solar company. The petition was filed in February of this year (2). At the beginning of March, the DoC extended its review period for the complaint (5). And at the end of March, the DoC appears to have terminated the ‘review period’ and begun its investigation.
More broadly, the issues here bring up a number of questions. Shifting to renewable energy is important, but what cost is society willing to pay to do so? Should American made goods be prioritized over foreign? Which approach ultimately creates more jobs for Americans? After all, it would be easy to make the case that 1). American solar companies importing from China employ more Americans than all-domestic manufacturers, 2). Punishing those importing companies would actually cut more American Jobs, which would 3). Slow down the overall transition to renewable energy in America.
Another question surrounds the ethicality with which the factories in Southeast Asia operate. Does the solar factory worker in Malaysia or Cambodia lead a substantially better working life then his Chinese counterpart?
Nevertheless, the results of the investigation will be crucial to follow. And speaking of Solar, for those lucky enough to be in the area, enjoy the sunny weather that has so graciously returned to New England.
2. Commerce will investigate alleged AD/CVD circumvention by Chinese solar panel companies in Southeast Asia (solarpowerworldonline.com)
3. The U.S. solar industry has a Chinese problem (solarpowerworldonline.com)
4. It’s Time to Set the Record Straight on U.S. Solar Manufacturing | RealClearEnergy
5. Commerce gives itself more time to consider solar anticircumvention petition (solarpowerworldonline.com)