- Jun 16, 2022 6:58 pm GMT
The United States’ economy is finally rebounding after two years of pandemic turmoil, yet still we face compounding challenges. Volatile energy prices, inflation (largely caused by rising fossil fuel prices), and global supply chain disruptions make everyday transactions slower and more expensive, exacerbating energy burdens for more households. Meanwhile, unchecked climate change threatens lives and livelihoods.
President Biden acted decisively to fight these intersecting challenges by boosting America’s clean energy supply chain, ensuring national energy security, and alleviating immediate pressures with a long-term shift in the industry’s course. These actions will ensure our economy prospers today and in the future.
Biden’s two-year suspension of anti-circumvention tariffs on solar panels provides the solar industry, investors, and consumers with the certainty needed to continue a rapid solar buildout—critical to solving climate change. Offering this near-term reprieve creates breathing room to ramp up domestic production of solar and other clean energy technologies—something the Senate has failed to do.
Invoking the Defense Production Act to ramp up domestic manufacturing of clean energy technologies, including solar, heat pumps, and electrolyzers, supports the goal of 100 percent clean electricity by 2035 along with widespread electrification of zero-carbon transportation, buildings, and industry. Finally, by setting new federal procurement targets, the administration ensures a growing market for new, clean technologies.
Ensuring access to low-cost clean energy technologies for all Americans will fight inflation and reduce energy costs, while bolstering our country’s energy security and global competitiveness.
Decades of offshoring have left the U.S. economy, consumers, and businesses vulnerable
At its peak in the late 1970s, American manufacturing accounted for a little more than 20% of gross domestic product (GDP) and supported 19.6 million jobs. Today, U.S. manufacturing accounts for around 11% of GDP and 12 million jobs. Domestic manufacturing’s decline stems from myriad factors, including several economic recessions, shifts in global market dynamics, and policy decisions that led companies to offshore their operations—between 1990 and 2011 the U.S. manufacturing sector lost one out of every three jobs.
The upside of this trend was the abundant availability of cheaper consumer goods and the scaled production of clean energy technologies, which helped reduce costs at a faster than anticipated pace. The downsides were far more substantial: Since the mid-1980s, the U.S. has lost nearly 7.5 million manufacturing jobs while entire communities were shuttered and impoverished.
Today, nearly 20 years later, we are experiencing the full impacts of an economy more vulnerable to supply chain disruptions and price fluctuations resulting from over-reliance on imported products and technologies, including those needed to tackle climate change.
Energy Innovation modeling shows the U.S. must rapidly deploy clean energy technologies including solar panels, wind turbines, batteries, electric vehicles, heat pumps, smart thermostats, and grid technologies to cut greenhouse gas emissions fast enough for a stable climate. Although we have these technologies, import over-reliance threatens our ability to bring them online quickly and puts industries at risk of disruption.
The solar industry is the latest example. When the U.S. Department of Commerce (DOC) under President Obama imposed tariffs on Chinese-made solar panels in 2012, U.S. solar companies reeled from an abrupt shift to their business models. Installers and developers relying on Chinese-made modules were either hit with tariffs or forced to choose new suppliers. Another round of tariffs by the Trump administration in 2016 cost nearly 20,000 jobs over just two years. Consumer prices rose and the U.S. industry contracted, considerably slowing the pace of installations.
The solar industry is yet again facing similar circumstances due to a recent DOC investigation. The probe, prompted by a complaint filed by a small U.S. solar company, focuses on whether Chinese manufacturers are skirting tariffs by funneling components through four countries in Southeast Asia which supply about 80% of U.S. solar panels and parts.
The investigation halted purchases, projects, and hiring. The Solar Energy Industry Association estimates that solar installation for 2022 and 2023 are already down 46%, or nearly 25 gigawatts (GW) of solar. More than 300 projects and 50 GW of solar capacity have already been cancelled or delayed, putting 1000,000 American jobs at risk.
Although the U.S. solar industry has invested in its domestic manufacturing sector, the lack of supportive policy has hindered its efforts. Activating industry reform and rectifying market failures requires definitive action, not just lip service.
Setting a new course for U.S. clean tech manufacturing
Reinvigorating U.S. manufacturing requires smart policy action now— and time is of the essence. Securing the raw material supply chain, training a skilled labor force, and navigating the operational logistics of increasing production takes a few years at minimum.
Climate change and volatile fossil fuel prices mean those are years we don’t have. President Biden’s decisive action this week will accelerate clean energy deployment and expand the domestic clean energy supply chain.
Suspending any potential anti-circumvention tariffs on solar panels for two years will empower the U.S. solar industry to continue developing and sustaining hundreds of thousands of good-paying jobs, while still upholding trade law. This temporary suspension will provide the solar industry with the certainty it needs to keep growing and preserve jobs, even as the DOC’s investigation continues.
Invoking the Defense Production Act will increase domestic manufacturing of an array of clean energy technologies, creating a huge opportunity for American innovation and job creation. This will ensure we have a homegrown supply of clean technologies that cannot be outsourced nor subjected to delayed shipments, import tariffs, or unexpected price volatility.
Finally, Biden is using the federal procurement to bolster demand for domestically manufactured technologies through “master supply agreements” that fast-track made-in-the-USA technology sales and “super preferences” setting domestic content standards for government contracts. The U.S. government estimates it could generate demand for up to 1 GW of domestically produced solar in the near term and up to 10 GW over the next decade.
These actions send a strong message that the U.S. remains committed to creating hundreds of thousands of new manufacturing jobs and boosting competitiveness in the global marketplace. In addition, domestic production of clean technologies will counteract inflation—helping more Americans adopt cheaper solar power, highly-efficient heat pumps, insulation, and other clean technologies that reduce energy bills. These actions couldn’t be more urgent as high oil and natural gas prices are hurting hard-working families and small businesses, and are a down payment on long-term U.S. energy security.
Congressional action would solidify U.S. as global clean energy leader
This is the type of leadership we need to solve climate change and ensure American competitiveness, but it’s not enough. Congress’ passage of a reconciliation package investing in clean energy, electric vehicles, battery storage, heat pumps, and all-electric technologies will solidify demand for made-in-the-U.S. technologies and products for decades to come. This demand will create jobs and reinvigorate communities and businesses nationwide.
As America’s clean tech industrial revolution accelerates, Congress can unlock substantial climate and clean energy investments that solidify the U.S. as a global clean energy leader and net-exporter of clean energy technologies. Let’s hope they follow President Biden’s lead.
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