This week sees big news come out of the Commerce Department regarding Chinese firms skirting tariffs imposed by the United States on solar panels that prompts an interesting comparison between domestic production and global climate change. On the policy front, the North America Electric Reliability Corporation released a new report highlighting the five key risks to grid reliability. Finally, a new report from the Department of Energy highlights the importance of energy efficiency.
On Friday 18 August 2023, the US Department of Commerce released a Final Determination stating that, “certain Chinese producers are shipping their solar products through Cambodia, Malaysia, Thailand, and/or Vietnam for minor processing in an attempt to avoid paying antidumping and countervailing duties”. This decision will result in import duties on imported panels from these countries beginning June 2024.
The decision received negative feedback from the US solar industry, with concerns on the ability of the US solar manufacturing capacity being able to scale to meet demand by the time these import duties kick in next year. In a statement by Gregory Wetstone, the president of the American Council on Renewable Energy:
“We’ve gone from toasting the anniversary of the Inflation Reduction Act and its positive impacts on America’s energy transition to lamenting the imposition of harmful solar tariffs that will severely constrict solar availability in the US,”
This decision does not come as a shock to the solar industry, in June 2022, the Biden Administration ordered a two-year moratorium on any potentially levied tariffs from the Department of Commerce to attempt to provide the US domestic solar industry enough time to construct a domestic supply chain for these panels. While the IRA has turbocharged invested in clean energy technology production, the industry has expressed doubt in the ability to create a supply chain to match the import of Chinese panels with less than a year remaining before the tariffs take effect.
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Takeaway The decision by the Department of Commerce represents the continuation of one of the biggest trends in the energy transition since passage of the IRA, domestication of supply chains by the US. This decision is of particular interest as it highlights the impact of onshoring supply chains on a nation level with respect to the global energy transition and speed of deployment of solar energy generation.
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Energy efficiency is the first fuel, optimizing energy usage through minimizing energy usage represents a fundamental pillar of the energy transition, to use our resources more efficiently. A report from the Department of Energy’s Lawrence Berkeley National Laboratory and the Brattle Group backs this claim up.
Some of the key takeaways that the report found:
The third bullet highlights the importance of building electrification as a path to building sector decarbonization (building operations account for 27% of global CO2 emissions). This electrification of buildings must be paired with efficiency changes to reduce the new loads being placed onto the grid. Buildings must engage in demand response mechanisms to reduce strain on the grid, essentially, becoming a part of a virtual power plant.