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    Climate Change May Bring New Era of Trade Wars, as E.U. and U.S. Spar

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    Countries are pursuing new solutions to try to mitigate climate change. More trade fights are likely to come hand in hand.WASHINGTON — Efforts to mitigate climate change are prompting countries across the world to embrace dramatically different policies toward industry and trade, bringing governments into conflict.These new clashes over climate policy are straining international alliances and the global trading system, hinting at a future in which policies aimed at staving off environmental catastrophe could also result in more frequent cross-border trade wars.In recent months, the United States and Europe have proposed or introduced subsidies, tariffs and other policies aimed at speeding the green energy transition. Proponents of the measures say governments must move aggressively to expand sources of cleaner energy and penalize the biggest emitters of planet-warming gases if they hope to avert a global climate disaster.But critics say these policies often put foreign countries and companies at a disadvantage, as governments subsidize their own industries or charge new tariffs on foreign products. The policies depart from a decades-long status quo in trade, in which the United States and Europe often joined forces through the World Trade Organization to try to knock down trade barriers and encourage countries to treat one another’s products more equally to boost global commerce.Now, new policies are pitting close allies against one another and widening fractures in an already fragile system of global trade governance, as countries try to contend with the existential challenge of climate change.“The climate crisis requires economic transformation at a scale and speed humanity has never attempted in our 5,000 years of written history,” said Todd N. Tucker, the director of industrial policy and trade at the Roosevelt Institute, who is an advocate for some of the measures. “Unsurprisingly, a task of this magnitude will require a new policy tool kit.”The current system of global trade funnels tens of millions of shipping containers stuffed with couches, clothing and car parts from foreign factories to the United States each year, often at astonishingly low prices. But the prices that consumers pay for these goods do not take into account the environmental harm generated by the far-off factories that make them, or by the container ships and cargo planes that carry them across the ocean.A factory in Chengde, China. U.S. officials believe they must lessen a dangerous dependence on goods from China.Fred Dufour/Agence France-Presse — Getty ImagesAmerican and European officials argue that more needs to be done to discourage trade in products made with more pollution or carbon emissions. And U.S. officials believe they must lessen a dangerous dependence on China in particular for the materials needed to power the green energy transition, like solar panels and electric vehicle batteries.The Biden administration is putting in place generous subsidies to encourage the production of clean energy technology in the United States, such as tax credits for consumers who buy American-made clean cars and companies building new plants for solar and wind power equipment. Both the United States and Europe are introducing taxes and tariffs aimed at encouraging less environmentally harmful ways of producing goods.Biden administration officials have expressed hopes that the climate transition could be a new opportunity for cooperation with allies. But so far, their initiatives seem to have mainly stirred controversy when the United States is already under attack for its response to recent trade rulings.The administration has publicly flouted several decisions of World Trade Organization panels that ruled against the United States in trade disputes involving national security issues. In two separate announcements in December, the Office of the United States Trade Representative said it would not change its policies to abide by W.T.O. decisions.But the biggest source of contention has been new tax credits for clean energy equipment and vehicles made in North America that were part of a sweeping climate and health policy bill that President Biden signed into law last year. European officials have called the measure a “job killer” and expressed fears they will lose out to the United States on new investments in batteries, green hydrogen, steel and other industries. In response, European Union officials began outlining their own plan this month to subsidize green energy industries — a move that critics fear will plunge the world into a costly and inefficient “subsidy war.”The United States and European Union have been searching for changes that could be made to mollify both sides before the U.S. tax-credit rules are settled in March. But the Biden administration appears to have only limited ability to change some of the law’s provisions. Members of Congress say they intentionally worded the law to benefit American manufacturing.Biden administration is putting in place subsidies to encourage the production of clean energy technology in the United States, such as tax credits for consumers who buy American-made clean cars.Brittany Greeson for The New York TimesEuropean officials have suggested that they could bring a trade case at the World Trade Organization that might be a prelude to imposing tariffs on American products in retaliation.Valdis Dombrovskis, the European commissioner for trade, said that the European Union was committed to finding solutions but that negotiations needed to make progress or the European Union would face “even stronger calls” to respond.“We need to follow the same rules of the game,” he said.Anne Krueger, a former official at the International Monetary Fund and World Bank, said the potential pain of American subsidies on Japan, South Korea and allies in Europe was “enormous.”“When you discriminate in favor of American companies and against the rest of the world, you’re hurting yourself and hurting others at the same time,” said Ms. Krueger, now a senior fellow at the School of Advanced International Studies at Johns Hopkins University.But in a letter last week, a collection of prominent labor unions and environmental groups urged Mr. Biden to move forward with the plans without delays, saying outdated trade rules should not be used to undermine support for a new clean energy economy.“It’s time to end this circular firing squad where countries threaten and, if successful, weaken or repeal one another’s climate measures through trade and investment agreements,” said Melinda St. Louis, the director of the Global Trade Watch for Public Citizen, one of the groups behind the letter.Valdis Dombrovskis, the European commissioner for trade, has pressed the United States to negotiate more on its climate-related subsidies for American manufacturing.Stephanie Lecocq/EPA, via ShutterstockOther recent climate policies have also spurred controversy. In mid-December, the European Union took a major step toward a new climate-focused trade policy as it reached a preliminary agreement to impose a new carbon tariff on certain imports. The so-called carbon border adjustment mechanism would apply to products from all countries that failed to take strict actions to cut their greenhouse gas emissions.The move is aimed at ensuring that European companies that must follow strict environmental regulations are not put at a disadvantage to competitors in countries where laxer environmental rules allow companies to produce and sell goods more cheaply. While European officials argue that their policy complies with global trade rules in a way that U.S. clean energy subsidies do not, it has still rankled countries like China and Turkey.The Biden administration has also been trying to create an international group that would impose tariffs on steel and aluminum from countries with laxer environmental policies. In December, it sent the European Union a brief initial proposal for such a trade arrangement.The idea still has a long way to go to be realized. But even as it would break new ground in addressing climate change, the approach may also end up aggravating allies like Canada, Mexico, Brazil and South Korea, which together provided more than half of America’s foreign steel last year.Under the initial proposal, these countries would theoretically have to produce steel as cleanly as the United States and Europe, or face tariffs on their products.A steel plant in Belgium. Under the initial proposal, countries would theoretically have to produce steel as cleanly as the United States and Europe, or face tariffs.Kevin Faingnaert for The New York TimesProponents of new climate-focused trade measures say discriminating against foreign products, and goods made with greater carbon emissions, is exactly what governments need to build up clean energy industries and address climate change.“You really do need to rethink some of the fundamentals of the system,” said Ilana Solomon, an independent trade consultant who previously worked with the Sierra Club.Ms. Solomon and others have proposed a “climate peace clause,” under which governments would commit to refrain from using the World Trade Organization and other trade agreements to challenge one another’s climate policies for 10 years.“The complete legitimacy of the global trading system has never been more in question,” she said.In the United States, support appears to be growing among both Republicans and Democrats for more nationalist policies that would encourage domestic production and discourage imports of dirtier goods — but that would also most likely violate World Trade Organization rules.Most Republicans do not support the idea of a national price on carbon. But they have shown more willingness to raise tariffs on foreign products that are made in environmentally damaging ways, which they see as a way to protect American jobs from foreign competition.Robert E. Lighthizer, a chief trade negotiator for the Trump administration, said there was “great overlap” between Republicans and Democrats on the idea of using trade tools to discourage imports of polluting products from abroad.“I’m coming at it to get more American employed and with higher wages,” he said. “You shouldn’t be able to get an economic advantage over some guy working in Detroit, trying to support his family, from pollution, by manufacturing overseas.” More

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    US Proposes Global Green Steel Club That Would Put Tariffs on China

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    A concept paper sent to the European Union suggests a new trade approach to tax metal made with higher carbon emissions in countries like China.WASHINGTON — The Biden administration on Wednesday sent a proposal to the European Union suggesting the creation of an international consortium that would promote trade in metals produced with less carbon emissions, while imposing tariffs on steel and aluminum from China and elsewhere, according to a copy viewed by The New York Times.The document, a concept paper drafted by the Office of the United States Trade Representative, provides the first concrete look at a new type of trade arrangement that the Biden administration views as a cornerstone of its approach to trade policy.The proposed group, known as the Global Arrangement on Sustainable Steel and Aluminum, would wield the power of American and European markets to try to bolster domestic industries in a way that also mitigated climate change. To do so, member countries would jointly impose a series of tariffs against metals produced in environmentally harmful ways.The levies would be aimed at China and other countries that did not join the group. Countries that did join would enjoy more favorable trade terms among themselves, especially for steel and aluminum produced more cleanly.To join the arrangement, countries would have to ensure that their steel and aluminum industries met certain emissions standards, according to the document. Governments would also have to commit to not overproduce steel and aluminum, which has pushed down global metal prices, and to limit activity by state-owned enterprises, which are often used to funnel subsidies to foreign metal makers. While the concept paper does not mention China, these requirements appear likely to bar it from becoming a member.The United States and European Union have been in talks about a climate-related trade deal for the steel and aluminum industries since last year. No U.S. trade agreement has ever included specific targets on carbon emissions, and negotiators have had much ground to cover to try to reconcile the varying U.S. and E.U. economic approaches to mitigating climate change.It is unclear what type of reception the proposal, which is still in its early stages, will receive from European leaders, as well as whether U.S. industry and politicians will support the idea. An E.U. official declined to comment on Wednesday on the details of an active negotiation, but said the two sides were discussing ways to continue and deepen their work on the arrangement.In recent weeks, trade tensions between the United States and Europe have risen to their highest levels since President Biden entered office, with leaders sparring over U.S. legislation aimed at encouraging the production of electric vehicles in North America. European leaders say the measures will put their industries at a disadvantage and have demanded changes that they say unfairly exclude European firms.A senior trade official, who spoke on the condition of anonymity because the paper was not yet public, said that the spat over electric vehicles was unlikely to spill over into negotiations over steel and aluminum, and that the governments were closely aligned on the goal of taking carbon intensity into account when it came to trade.After a meeting with European officials outside Washington this week, Katherine Tai, the U.S. trade representative, called the steel and aluminum effort “one of the most consequential things that we’re working on between the U.S. and the E.U. with respect to trade.” She said it was “on track” to meet a previous goal of completion by next year.“It is an important part of the track record that we have, Washington to Brussels, in terms of taking some of the most challenging issues of our time, some of the things that have been really challenging between us, and demonstrating that we can exercise leadership with a vision for the future,” Ms. Tai said during a news conference Monday.Valdis Dombrovskis, the European commissioner for trade, said the methods that the United States and Europe were developing to measure the carbon footprint of steel and aluminum could be expanded to other products, as part of a new trans-Atlantic initiative on sustainable trade that the governments had agreed to launch.“It will provide a common language for understanding many things,” he said.It’s also unclear how much support the plan will have from domestic makers of steel and aluminum. While some have voiced support for the broader strategy, company executives and labor union leaders are still reviewing the plans, and say the potential impact on U.S. industry would hinge on details that had yet to be determined..css-1v2n82w{max-width:600px;width:calc(100% – 40px);margin-top:20px;margin-bottom:25px;height:auto;margin-left:auto;margin-right:auto;font-family:nyt-franklin;color:var(–color-content-secondary,#363636);}@media only screen and (max-width:480px){.css-1v2n82w{margin-left:20px;margin-right:20px;}}@media only screen and (min-width:1024px){.css-1v2n82w{width:600px;}}.css-161d8zr{width:40px;margin-bottom:18px;text-align:left;margin-left:0;color:var(–color-content-primary,#121212);border:1px solid var(–color-content-primary,#121212);}@media only screen and (max-width:480px){.css-161d8zr{width:30px;margin-bottom:15px;}}.css-tjtq43{line-height:25px;}@media only screen and (max-width:480px){.css-tjtq43{line-height:24px;}}.css-x1k33h{font-family:nyt-cheltenham;font-size:19px;font-weight:700;line-height:25px;}.css-1hvpcve{font-size:17px;font-weight:300;line-height:25px;}.css-1hvpcve em{font-style:italic;}.css-1hvpcve strong{font-weight:bold;}.css-1hvpcve a{font-weight:500;color:var(–color-content-secondary,#363636);}.css-1c013uz{margin-top:18px;margin-bottom:22px;}@media only screen and (max-width:480px){.css-1c013uz{font-size:14px;margin-top:15px;margin-bottom:20px;}}.css-1c013uz a{color:var(–color-signal-editorial,#326891);-webkit-text-decoration:underline;text-decoration:underline;font-weight:500;font-size:16px;}@media only screen and (max-width:480px){.css-1c013uz a{font-size:13px;}}.css-1c013uz a:hover{-webkit-text-decoration:none;text-decoration:none;}What we consider before using anonymous sources. Do the sources know the information? What’s their motivation for telling us? Have they proved reliable in the past? Can we corroborate the information? Even with these questions satisfied, The Times uses anonymous sources as a last resort. The reporter and at least one editor know the identity of the source.Learn more about our process.The U.S. steel industry is already among the cleanest in the world, as a result of the country’s stronger environmental standards and a focus on recycling scrap metal. The agreement is designed to capitalize on those advantages and help American companies withstand competition from heavily subsidized steel and aluminum manufacturers in China and elsewhere.But the United States is also home to many industries that buy foreign steel and aluminum to make into other products. They could object that the move would increase their costs.If the United States and Europe move forward with the structure, there is likely to be an intense fight over where tariffs are set and how carbon emissions are measured.The development of a method for figuring out the amount of greenhouse gas emissions in the production of any particular product is still in the early stages, and much more data would need to be gathered at the level of specific products and companies, people familiar with the plans said.Both the United States and Europe have expressed interest in expanding the consortium’s membership to any country that can meet its high standards. But the arrangement could rankle American allies in the short term, if countries like Japan and South Korea are initially left out.The measure could also trigger retaliation from China, or be challenged at the World Trade Organization, which includes China and requires its members to treat one another equally in trade.It’s also still unclear what legal authority the Biden administration would use to impose the tariffs. The senior trade official said the Biden administration hoped to involve Congress in setting up the policy. But analysts speculated that the administration could also resort to the same national security-related executive authority that the Trump administration used in imposing its steel and aluminum tariffs.And while it will please the administration’s allies in labor unions and environmental advocacy groups, the proposal is likely to disappoint advocates of freer trade, who had hoped the Biden administration would reject the more protectionist approach of the Trump administration. Instead of getting rid of the global levies on steel and aluminum that the Trump administration introduced in 2018, this effort would replace them with a new global system of tariffs structured around climate concerns.The concept paper proposes a tiered system of tariffs that would rise with the level of carbon emitted in the production of a particular steel or aluminum good. Additional tariffs would be levied on any product coming from countries outside the consortium.The tariff rate would start at 0 for the cleanest products from member countries. Beyond that, the paper does not specify rates, instead representing them as X, Y or Z.The proposal to impose tariffs on steel from China and other countries as part of the arrangement was previously reported by Bloomberg.The thresholds for the tariff rates, and for membership in the consortium, are designed to increase over time to encourage countries to continue cleaning up their industries. The arrangement would “incentivize industry globally to decarbonize as a condition of market access,” the paper says.Todd Tucker, the director of industrial policy and trade at the Roosevelt Institute, compared the approach to “a carbon tariff imposed on countries that are outside the carbon club.”The United States and European Union appear to be going for “a higher-ambition route” to address global steel trade, Mr. Tucker said. “What that means is leveraging the power of the U.S. and European markets to drive decarbonization in the global steel market.” More

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    China’s Record Drought is Drying Rivers and Feeding Its Coal Habit

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    Dry weather in southwestern China has crippled huge hydroelectric dams, forcing cities to impose rolling blackouts and driving up the country’s use of coal.HONG KONG — Car assembly plants and electronics factories in southwestern China have closed for lack of power. Owners of electric cars are waiting overnight at charging stations to recharge their vehicles. Rivers are so low there that ships can no longer carry supplies.A record-setting drought and an 11-week heat wave are causing broad disruption in a region that depends on dams for more than three-quarters of its electricity generation. The factory shutdowns and logistical delays are hindering China’s efforts to revive its economy as the country’s leader, Xi Jinping, prepares to claim a third term in power this autumn.The ruling Communist Party is already struggling to reverse a slowdown in China, the world’s second largest economy, caused by the country’s strict Covid lockdowns and a slumping real estate market. Young people are finding it hard to get jobs, while uncertainty over the economic outlook is compelling residents to save instead of spend, and to hold off on buying new homes.Now, the extreme heat is adding to frustration by snarling power supplies, threatening crops and setting off wildfires. Reduced electricity from hydroelectric dams has prompted China to burn more coal, a large contributor to air pollution and to greenhouse gas emissions that cause global warming.Many cities around the country have been forced to impose rolling blackouts or limit energy use. In Chengdu, the capital of Sichuan Province, several neighborhoods went without electricity for more than 10 hours a day.An electronic billboard shut down to save energy in Chengdu, China.Agence France-Presse — Getty ImagesVera Wang, a Chengdu resident, said that just to charge her electric car, her boyfriend waited in a long line overnight at a charging station that was only partly operating. It was 4 a.m. by the time he reached the front of the line.“The line was so long that it extended from the underground parking lot to the road outside,” she said.The heat wave has scorched China for more than two months, stretching from Sichuan in the southwest to the country’s eastern coast and sending the mercury above 104 degrees on many days. In Chongqing, a sprawling metropolis in the southwest with around 20 million people, the temperature soared to 113 degrees last week, the first time such a high reading had been recorded in a Chinese city outside the western desert region of Xinjiang.The searing heat set off wildfires in the mountains and forests on Chongqing’s outskirts, where thousands of firefighters and volunteers have worked to put out blazes. Residents said the air smelled of acrid smoke.The drought has dried up dozens of rivers and reservoirs in the region and cut Sichuan’s hydropower generation capacity by half, hurting industrial production. Volkswagen closed its sprawling, 6,000-employee factory in Chengdu for the past week and a half, and Toyota also temporarily suspended operations at its assembly plant.A villager attempting to put out a bush fire with a mop in his field during a drought in Xinyao, a village in Jiangxi Province, on Thursday.Thomas Peter/ReutersFoxconn, the giant Taiwanese electronics manufacturer, and CATL, the world’s largest maker of electric car batteries, have both curtailed production at factories in the vicinity.In Ezhou, a city in central China near Wuhan, the Yangtze River is now at its lowest level for this time of year since record-keeping began there in 1865. People’s Daily, the main newspaper of the Communist Party, reported on Aug. 19 that the Yangtze River had fallen to the same average level it normally reaches at the end of the winter dry season.Read More About Extreme WeatherRelics of the Past: As a drought starves Europe’s rivers and brings water levels down, shipwrecks, bombs and objects dating back thousands of years are turning up at the water’s surface.Preparing for Disaster: With the cost and frequency of weather-driven disasters on the rise,  taking steps to be ready financially is more crucial than ever. Here are some tips.Wildfires Out West: California and other Western states are particularly prone to increasingly catastrophic blazes. There are four key factors.Colorado River: With water levels near their lowest point ever, Arizona and Nevada faced new restrictions on the amount of water they can pump out of the river.But the disruptions from the hydropower shortfall are being felt far from the southwest, including in China’s eastern cities, which are buyers of hydropower. Some factories and commercial buildings in cities like Hangzhou and Shanghai are rationing electricity.Kevin Ni, an online marketing worker in Hangzhou, said that his office was stifling because few air-conditioners were allowed to run.“We have to eat ice pops and drink iced drinks,” he said. “I just put my hands on the ice pops, that cools me the most.”A satellite image showing the Yangtze River last August between Huanggang and Ezhou, in Hubei Province, China.Planet LabsThe same view this month, showing how much lower the water levels are than in the previous year.Planet LabsThe falling water levels in major rivers that serve the region’s main transport hubs have also led to delays elsewhere in the supply chain. The Yangtze River has receded so much that many oceangoing ships can no longer reach upstream ports. The upper Yangtze basin normally gets half its entire annual rainfall just in July and August, so the failure of this year’s rains may mean a long wait for more water.That is forcing China to divert large numbers of trucks to carry their cargo. A single ship can require 500 or more trucks to move its cargo.“We’re losing a few months of really efficient shipping,” said Even Rogers Pay, a food and agriculture analyst at Trivium, a Beijing consulting firm.The heat wave and drought are also starting to drive food prices higher in China, especially for fruit and vegetables. Farmers’ fields and orchards are wilting. Sichuan is a leading grower in China of apples, plums and other fruit, and fruit trees that die could take five years to replace. The price of bok choy, a popular cabbage, has nearly doubled in Wuhan this month.“That’s going to create more economic pain, which is the last thing the leadership wants to see,” Ms. Pay said.Ships sailing on the Yangtze River in Jiujiang, Jiangxi Province, on Tuesday. The Yangtze River has receded so low that many oceangoing ships can no longer reach upstream ports.Alex Plavevski/EPA, via ShutterstockThe Ministry of Agriculture and Rural Affairs and four other departments issued an emergency notice warning on Tuesday that the drought posed a “severe threat” to China’s autumn harvest. China’s cabinet on Wednesday approved $1.5 billion for disaster relief and assistance to rice farmers and another $1.5 billion for overall farm subsidies.The government has urged local officials to seek out more water sources and allocate more electricity to support farmers and promote the planting of leafy vegetables, which are highly perishable, in big cities. Fire trucks have been used to spray water on fields and deliver water to pig farms.The extreme weather sweeping across China also has potential implications for the world’s efforts to halt climate change. Beijing has sought to offset at least part of the lost hydropower from the drought by ramping up the use of coal-fired power plants. China’s domestic mining of coal has been at or near record levels, and customs data shows that its imports of coal from Russia reached a new high last month.But China’s reliance on the fossil fuel raises questions about its commitment to slowing the growth of its carbon emissions.“In the short term in China, the very, very painful realization is that only coal can serve as the base” for the electricity supply, said Ma Jun, the director of the Institute of Public and Environmental Affairs, a Beijing environmental group. Sichuan Province has lured energy-intensive industries like chemical manufacturing for many years with extremely low electricity prices, he said, and some of these industries have squandered power through inefficiency.A dry vegetable plot at a farm in Longquan, a village in Chongqing.Mark Schiefelbein/Associated PressMr. Ma struck an optimistic note, however, about the direction of China’s climate strategy, saying that in the medium term, “China is very committed to carbon targets and renewable energy.”The government has sought to mitigate the effects of global warming on its economy. The National Development and Reform Commission, China’s top economic planning ministry, set up a working group last winter to analyze the effects of climate change on water-related industries like hydroelectric dams.While such efforts may help China preserve the viability of renewable energy programs, they may not prompt China to limit the burning of coal this year as a quick fix, said Ed Cunningham, the director of the Asia Energy and Sustainability Initiative at the Harvard Kennedy School.“They’re much more comfortable with coal,” Mr. Cunningham said, “and the reality is that when there’s a shortage of hydro, they use coal.”Muyi Xiao More

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    Pace of Climate Change Sends Economists Back to Drawing Board

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    Economists have been examining the impact of climate change for almost as long as it’s been known to science.In the 1970s, the Yale economist William Nordhaus began constructing a model meant to gauge the effect of warming on economic growth. The work, first published in 1992, gave rise to a field of scholarship assessing the cost to society of each ton of emitted carbon offset by the benefits of cheap power — and thus how much it was worth paying to avert it.Dr. Nordhaus became a leading voice for a nationwide carbon tax that would discourage the use of fossil fuels and propel a transition toward more sustainable forms of energy. It remained the preferred choice of economists and business interests for decades. And in 2018, Dr. Nordhaus was honored with the Nobel Memorial Prize in Economic Sciences.But as President Biden signed the Inflation Reduction Act with its $392 billion in climate-related subsidies, one thing became very clear: The nation’s biggest initiative to address climate change is built on a different foundation from the one Dr. Nordhaus proposed.Rather than imposing a tax, the legislation offers tax credits, loans and grants — technology-specific carrots that have historically been seen as less efficient than the stick of penalizing carbon emissions more broadly.The outcome reflects a larger trend in public policy, one that is prompting economists to ponder why the profession was so focused on a solution that ultimately went nowhere in Congress — and how economists could be more useful as the damage from extreme weather mounts.A central shift in thinking, many say, is that climate change has moved faster than foreseen, and in less predictable ways, raising the urgency of government intervention. In addition, technologies like solar panels and batteries are cheap and abundant enough to enable a fuller shift away from fossil fuels, rather than slightly decreasing their use.Robert Kopp, a climate scientist at Rutgers University, worked on developing carbon pricing methods at the Department of Energy. He thinks the relentless focus on prices, with little attention paid to direct investments, lasted too long.“There was an idealization and simplification of the problem that started in the economics literature,” Dr. Kopp said. “And things that start out in the economics literature have half-lives in the applied policy world that are longer than the time period during which they’re the frontier of the field.”Carbon taxes and emissions trading systems have been instituted in many places, such as Denmark and California. But a federal measure in the United States, setting a cap on carbon emissions and letting companies trade their allotments, failed in 2010.What’s in the Inflation Reduction ActCard 1 of 8What’s in the Inflation Reduction ActA substantive legislation. More

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    Biden to Pause New Solar Tariffs as White House Aims to Boost Adoption

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    WASHINGTON — The Biden administration on Monday announced a two-year pause on imposing any new tariffs on the solar industry, a decision that follows an outcry from importers who have complained the levies are threatening broader adoption of solar energy in the United States.The move is a victory for domestic solar installers, who said the tariffs would put at risk the Biden administration’s goal of significantly cutting carbon emissions by the end of the decade by reducing the flow of products into the United States. But it goes against the wishes of some American solar manufacturers and their defenders, who have been pushing the administration to erect tougher barriers on cheap imports to help revive the domestic industry.It was the latest example of President Biden’s being caught between competing impulses when it comes to trying to steer the United States away from planet-warming fossil fuels, as he has pledged to do. By limiting tariffs, Mr. Biden will ensure a sufficient and cheap supply of solar panels at a time of high inflation and attempt to put stalled solar projects back on track. But the decision will postpone other White House efforts that might have punished Chinese companies for trade violations and lessened Beijing’s role in global supply chains.To counteract complaints by the domestic solar industry, the administration said that Mr. Biden would attempt to speed U.S. manufacturing of solar components, including by invoking the authorities of the Defense Production Act, which gives the president expanded powers and funding to direct the activities of private businesses.The prospect of additional tariffs stemmed from an ongoing investigation by the Commerce Department, which is looking into whether Chinese solar firms — which are already subject to tariffs — tried to get around those levies by moving their operations out of China and into Southeast Asia.Auxin Solar, a small manufacturer of solar panels based in California, had requested the inquiry, which is examining imports from Vietnam, Malaysia, Thailand and Cambodia.In 2020, 89 percent of the solar modules used in the United States were imported, with Southeast Asian countries accounting for the bulk of the shipments.If the Commerce Department determines that the factories were set up to circumvent U.S. tariffs, the administration could retroactively impose tariffs on shipments to the United States. But under the tariff “pause” that Mr. Biden ordered on Monday, such levies could not be imposed for the next two years.The decision is the latest turn in a long game of whack-a-mole the U.S. government has played against low-priced imports in the solar industry.While U.S. companies were some of the first to introduce solar technology, China came to dominate global solar manufacturing in recent decades by subsidizing production and creating a vibrant domestic market for solar installation. In 2011, the United States imposed duties on Chinese products to counteract subsidies and unfairly low prices. U.S. installers then started buying more products from Taiwan, but in 2015 the United States imposed duties on Taiwan as well.Trade experts said that pausing the tariffs could undercut trade laws aimed at protecting American workers by allowing companies in China to continue flooding the United States with cheap imports.Auxin Solar, a California manufacturer of solar panels.Anastasiia Sapon for The New York TimesMamun Rashid, chief executive of Auxin Solar.Anastasiia Sapon for The New York TimesOn Monday, Auxin’s chief executive, Mamun Rashid, said President Biden was interfering with the investigation.“By taking this unprecedented — and potentially illegal — action, he has opened the door wide for Chinese-funded special interests to defeat the fair application of U.S. trade law,” Mr. Rashid said in a statement.To pause the tariffs, a Biden administration official said the administration was invoking a section of the 1930 Tariff Act, which allows the president to suspend certain import duties to address an emergency. Commerce Department officials said their investigation would continue and that any tariffs that resulted from their findings would begin after the 24-month pause expired.“The president’s emergency declaration ensures America’s families have access to reliable and clean electricity while also ensuring we have the ability to hold our trading partners accountable to their commitments,” Gina Raimondo, the Commerce secretary, said in a release.The possibility of tariffs has touched off an ugly battle in recent months over the future of the U.S. solar industry.American solar companies have said that the prospect of more — and retroactive — tariffs was already having a chilling effect on imports. Groups such as the Solar Energy Industries Association, whose members include several Chinese manufacturers with U.S. operations, have been lobbying the White House against the tariffs and on Monday welcomed news that the administration would pause any new levies.“Today’s actions protect existing solar jobs, will lead to increased employment in the solar industry and foster a robust solar manufacturing base here at home,” Abigail Ross Hopper, the president and chief executive of S.E.I.A., said in an emailed statement.“During the two-year tariff suspension window,” she said, “the U.S. solar industry can return to rapid deployment while the Defense Production Act helps grow American solar manufacturing.”Companies that rely on imported products — and U.S. officials who are prioritizing the transition to solar energy — have been complaining that the Commerce Department inquiry has injected uncertainty into future pricing for the solar market, slowing the transition away from fossil fuels. NextEra Energy, one of the largest renewable energy companies in the country, had said it expected to delay the installation of between two and three gigawatts worth of solar and storage construction — enough to power more than a million homes.“The last couple of months we have had to pause all construction efforts,” said Scott Buckley, president of Green Lantern Solar, a solar installer based in Vermont. Mr. Buckley said his company had been forced to put about 10 projects on hold, which would have resulted in the installation of about 50 acres of solar panels.Mr. Buckley said there was no easy solution to the country’s reliance on imported products in the short term and that the White House’s actions on Monday would allow companies like his to resume installations this year.“This is a get back to work order,” he said. “That’s the way I think about it. Let’s clear the logjams.”Solar panels made in China. Major industry groups, some of which include Chinese manufacturers, had been lobbying the Biden administration to take action against the tariffs.Adam Dean for The New York TimesBut domestic solar producers and U.S. labor unions have said that the recent surge in imports from Chinese companies doing their manufacturing in Southeast Asia clearly violates U.S. trade law, which forbids companies to try to avoid U.S. tariffs by moving production or assembly of a product to another country.The domestic producers have accused importers — who have close commercial ties with China — of exaggerating their industry’s hardships to try to sway the Biden administration and preserve profit margins that stem from unfairly priced imports.“If you have a supply chain that depends on dumped and subsidized imports, then you’ve got a problem with your supply chain,” said Scott Paul, the president of the Alliance for American Manufacturing.“We’re getting dependent on hostile countries without sufficient domestic production to ensure against price hikes and supply shocks,” said Michael Stumo, chief executive of Coalition for a Prosperous America, a nonprofit group that promotes domestic manufacturing. “Whether it’s medicine, or PPE, or solar panels, you’ve got to have domestic production.”Some critics also said the legal rationale for the White House’s moves was specious, arguing that the administration was effectively declaring a state of emergency because of the consequences of its own trade laws.Scott Lincicome, a trade policy expert at the Cato Institute, a libertarian think tank, said that the administration’s actions seemed to be “quite the stretch of the statute.”The trade law provision that Mr. Biden invoked allows the president to “declare an emergency to exist by reason of a state of war, or otherwise,” and during such a state of emergency to import “food, clothing, and medical, surgical, and other supplies for use in emergency relief work” duty free.He said critics of U.S. tariffs had long proposed a “public interest” test that would allow levies to be lifted to mitigate broader economic harm, but Congress had never approved such an action.In a letter late last month, Senators Sherrod Brown of Ohio and Bob Casey of Pennsylvania, both Democrats, complained that solar importers had spent “millions of dollars on advertising and lobbying to urge political interference in the trade enforcement process.” Biden administration officials had previously said that the Commerce Department’s inquiry was immune to political interference, describing it as “quasi-judicial” and “apolitical.”Solar tariffs have been a source of contention for decades, but they have taken on renewed importance in recent years as the consequences of climate change became more apparent. Chinese companies have expanded internationally, allowing them to continue to ship products to the United States, while American companies have struggled to compete.The global solar industry’s dependence on China has complicated the Biden administration’s efforts to ban products linked with forced labor in Xinjiang, the northwest region where U.S. officials say Chinese authorities have detained more than one million Uyghurs and other minorities. Xinjiang is a major producer of polysilicon, the raw material for solar panels.Solar importers complained that a ban last year on solar raw materials made with forced labor by Hoshine Silicon Industry temporarily halted billions of dollars of American projects, as companies struggled to produce documentation to customs officials to prove that neither they nor their suppliers were obtaining material from Hoshine.After the Russia invasion of Ukraine in February, high gasoline prices have also impeded a broader desire to push the country away from oil and left Mr. Biden asking oil-producing nations in the Middle East and beyond to ramp up production.White House officials said Monday that Mr. Biden would sign a suite of directives meant to increase the domestic development of low-emission energy technologies. He is set to make it easier for domestic suppliers to sell solar systems to the federal government. And he will order the Department of Energy to use the Defense Production Act to “rapidly expand American manufacturing” of solar panel parts, building insulation, heat pumps, power grid infrastructure and fuel cells, the administration said in a fact sheet. More

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    Biden to Allow Higher-Ethanol E15 Gas to Be Sold All Summer

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    WASHINGTON — President Biden announced on Tuesday a plan to suspend a ban on summertime sales of higher-ethanol gasoline blends, a move that White House officials said was aimed at reducing gas prices but that energy experts predicted would have only a marginal impact at the pump.The Environmental Protection Agency will issue a waiver that would allow the blend known as E15 — which is made of 15 percent ethanol — to be used between June 1 and Sept. 15. The White House estimated that approximately 2,300 stations in the country offer the blend and cast the decision as a move toward “energy independence.”“E15 is about 10 cents a gallon cheaper,” Mr. Biden said, speaking after taking a tour of a production facility that produces 150 million gallons of bioethanol annually. “And some gas stations offer an even bigger discount than that.”“When you have a choice, you have competition,” Mr. Biden added. “When you have competition, you have better prices.”The decision to lift the summertime ban comes as Mr. Biden faces growing pressure to bring down energy prices, which helped drive the fastest rate of inflation since 1981 in March. A gallon of gas was averaging $4.10 on Tuesday, according to AAA. Last month, the president announced a plan to release one million barrels of oil a day from the U.S. Strategic Petroleum Reserve over the next six months.Understand Inflation in the U.S.Inflation 101: What is inflation, why is it up and whom does it hurt? Our guide explains it all.Your Questions, Answered: Times readers sent us their questions about rising prices. Top experts and economists weighed in.Interest Rates: As it seeks to curb inflation, the Federal Reserve announced that it was raising interest rates for the first time since 2018.How Americans Feel: We asked 2,200 people where they’ve noticed inflation. Many mentioned basic necessities, like food and gas.Supply Chain’s Role: A key factor in rising inflation is the continuing turmoil in the global supply chain. Here’s how the crisis unfolded.Ethanol is made from corn and other crops and has been mixed into some types of gasoline for years as a way to reduce reliance on oil. But the blend’s higher volatility can contribute to smog in warmer weather. For that reason, environmental groups have traditionally objected to lifting the summertime ban, as have oil companies, which fear greater use of ethanol will cut into their sales.How much the presence of ethanol holds down fuel prices has been a subject of debate among economists. Some experts said the decision was likely to reap larger political benefits than financial ones.“This is still very very small compared with the strategic petroleum reserve release,” said David Victor, a climate policy expert at the University of California, San Diego. “This one is much more of a transparently political move.”Lawmakers in corn-producing states have been urging Mr. Biden to use biofuels to fill the gap created by the United States ban on importing Russian oil. Oil refiners are required to blend some ethanol into gasoline under a pair of laws, passed in 2005 and 2007, intended to reduce the use of oil and the creation of greenhouse gases by mandating increased levels of ethanol in the nation’s fuel mix every year. However, since passage of the 2007 law, the mandate has been met with criticism that it has contributed to increased fuel prices and has done little to reduce greenhouse gas pollution.Inflation F.A.Q.Card 1 of 6What is inflation? More

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    Why the U.S. Can’t Quickly Wean Europe From Russian Gas

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    The Biden administration’s plan to send more natural gas to Europe will be hampered by the lack of export and import terminals.HOUSTON — President Biden announced Friday that the United States would send more natural gas to Europe to help it break its dependence on Russian energy. But that plan will largely be symbolic, at least in the short run, because the United States doesn’t have enough capacity to export more gas and Europe doesn’t have the capacity to import significantly more.In recent months, American exporters, with President Biden’s encouragement, have already maximized the output of terminals that turn natural gas into a liquid easily shipped on large tankers. And they have diverted shipments originally bound for Asia to Europe.But energy experts said that building enough terminals on both sides of the Atlantic to significantly expand U.S. exports of liquefied natural gas, or L.N.G., to Europe could take two to five years. That reality is likely to limit the scope of the natural gas supply announcement that Mr. Biden and the European Commission president, Ursula von der Leyen, announced on Friday.“In the near term there are really no good options, other than begging an Asian buyer or two to give up their L.N.G. tanker for Europe,” said Robert McNally, who was an energy adviser to former President George W. Bush. But he added that once sufficient gas terminals were built, the United States could become the “arsenal for energy” that helps Europe break its dependence on Russia. Friday’s agreement, which calls on the United States to help the European Union secure an additional 15 billion cubic meters of liquefied natural gas this year, could also undermine efforts by Mr. Biden and European officials to combat climate change. Once new export and import terminals are built, they will probably keep operating for several decades, perpetuating the use of a fossil fuel much longer than many environmentalists consider sustainable for the planet’s well-being.For now, however, climate concerns appear to be taking a back seat as U.S. and European leaders seek to punish President Vladimir V. Putin of Russia for invading Ukraine by depriving him of billions of dollars in energy sales.The United States has already increased energy exports to Europe substantially. So far this year, nearly three-quarters of U.S. L.N.G. has gone to Europe, up from 34 percent for all of 2021. As prices for natural gas have soared in Europe, American companies have done everything they can to send more gas there. The Biden administration has helped by getting buyers in Asian countries like Japan and South Korea to forgo L.N.G. shipments so they could be sent to Europe.The United States has plenty of natural gas, much of it in shale fields from Pennsylvania to the Southwest. Gas bubbles out of the ground with oil from the Permian Basin, which straddles Texas and New Mexico, and producers there are gradually increasing their output of both oil and gas after greatly reducing production in the first year of the pandemic, when energy prices collapsed.But the big problem with sending Europe more energy is that natural gas, unlike crude oil, cannot easily be put on oceangoing ships. The gas has to first be chilled in an expensive process at export terminals, mostly on the Gulf Coast. The liquid gas is then poured into specialized tankers. When the ships arrive at their destination, the process is run in reverse to convert L.N.G. back into gas.A large export or import terminal can cost more than $1 billion, and planning, obtaining permits and completing construction can take years. There are seven export terminals in the United States and 28 large-scale import terminals in Europe, which also gets L.N.G. from suppliers like Qatar and Egypt.Some European countries, including Germany, have until recently been uninterested in building L.N.G. terminals because it was far cheaper to import gas by pipeline from Russia. Germany is now reviving plans to build its first L.N.G. import terminal on its northern coast.A pier in Wilhelmshaven, Germany, the port where Uniper, a German energy company, wanted to build a liquified natural gas terminal before it was shelved. Now Germany is reviving plans to build it.The New York Times“Europe’s need for gas far exceeds what the system can supply,” said Nikos Tsafos, an energy analyst at the Center for Strategic and International Studies in Washington. “Diplomacy can only do so much.”In the longer term, however, energy experts say the United States could do a lot to help Europe. Along with the European Union, Washington could provide loan guarantees for U.S. export and European import terminals to reduce costs and accelerate construction. Governments could require international lending institutions like the World Bank and the European Investment Bank to make natural gas terminals, pipelines and processing facilities a priority. And they could ease regulations that gas producers, pipeline builders and terminal developers argue have made it more difficult or expensive to build gas infrastructure.Charif Souki, executive chairman of Tellurian, a U.S. gas producer that is planning to build an export terminal in Louisiana, said he hoped the Biden administration would streamline permitting and environmental reviews “to make sure things happen quickly without micromanaging everything.” He added that the government could encourage banks and investors, some of whom have recently avoided oil and gas projects in an effort to burnish their climate credentials, to lend to projects like his.“If all the major banks in the U.S. and major institutions like BlackRock and Blackstone feel comfortable investing in hydrocarbons, and they are not going to be criticized, we will develop $100 billion worth of infrastructure we need,” Mr. Souki said.A handful of export terminals are under construction in the United States and could increase exports by roughly a third by 2026. Roughly a dozen U.S. export terminal projects have been approved by the Federal Energy Regulatory Commission but can’t go ahead until they secure financing from investors and lenders.“That’s the bottleneck,” Mr. Tsafos said.Roughly 10 European import terminals are being built or are in the planning stages in Italy, Belgium, Poland, Germany, Cyprus and Greece, but most still don’t have their financing lined up.The Russia-Ukraine War and the Global EconomyCard 1 of 6Rising concerns. More

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    Will War Make Europe’s Switch to Clean Energy Even Harder?

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    At the Siemens Gamesa factory in Aalborg, Denmark, where the next generation of offshore wind turbines is being built, workers are on their hands and knees inside a shallow, canoe-shaped pod that stretches the length of a football field. It is a mold used to produce one half of a single propeller blade. Guided by laser markings, the crew is lining the sides with panels of balsa wood.The gargantuan blades offer a glimpse of the energy future that Europe is racing toward with sudden urgency. The invasion of Ukraine by Russia — the European Union’s largest supplier of natural gas and oil — has spurred governments to accelerate plans to reduce their dependence on climate-changing fossil fuels. Armed conflict has prompted policymaking pledges that the more distant threat of an uninhabitable planet has not.Smoothly managing Europe’s energy switch was always going to be difficult. Now, as economies stagger back from the second year of the pandemic, Russia’s attack on Ukraine grinds on and energy prices soar, the painful trade-offs have crystallized like never before.Moving investments away from oil, gas and coal to sustainable sources like wind and solar, limiting and taxing carbon emissions, and building a new energy infrastructure to transmit electricity are crucial to weaning Europe off fossil fuels. But they are all likely to raise costs during the transition, an extremely difficult pill for the public and politicians to swallow.The crisis that has inspired Europe to more quickly reach toward clean energy sources like wind and solar also risks pitching it backward by unwinding efforts to shut coal mines and stop drilling new oil and gas wells to replace Russian fuel and bring prices down.Workers at Siemens Gamesa preparing a mold used to produce one half of a single propeller blade.Carsten Snejbjerg for The New York TimesIn Germany, Europe’s largest economy, leaders are planning to have several coal-fired power plants that were recently taken off the grid placed in reserve, so that they could be quickly fired up if needed. After years of dithering about investing so much in the natural gas infrastructure, Germany is also accelerating plans to build its own terminals for receiving liquefied natural gas, another fossil fuel.“Security of our energy supply stands above everything else at the moment,” said Robert Habeck, the country’s economy minister and a Green party leader in the coalition government.Local officials are taking similar steps. Last week, the Munich government decided to extend the life of one of the city’s coal-fired power plants, scrapping plans to convert it to burn natural gas in spring 2023.And that’s in a country that has helped spearhead Europe’s efforts to shift to renewable energy.In Poland, which gets 70 percent of its energy from coal and has been at loggerheads with the European Union over the climate agenda, the sudden energy shortage is being used by critics as evidence that the push to shut mines was a mistake.A power plant in Poland run by CEZ Group, a Czech conglomerate of companies in the energy sector.Maciek Nabrdalik for The New York TimesDominik Kolorz, head of the Silesian region of Solidarity Trade Union, said through a translator that “the so-called E.U. climate policy” was leading to a “huge economic crisis” and “total energy dependence on the Russian Federation.”In many ways, Europe has been a leading laboratory for the decades-long transition. It started establishing taxes on carbon emissions more than 20 years ago. The European Union pioneered an emissions trading system, which capped the amount of greenhouse gases companies produced and created a marketplace where licenses for those emissions could be bought and sold. Polluting industries like steel were gradually pushed to clean up. Last year, members proposed a carbon tax on imports from carbon-producing sectors like steel and cement.And it has led the way in generating wind power, especially from ocean-based turbines. Siemens Gamesa Renewable Energy, for example, has been instrumental in planting rows of colossal whirligigs at sea that can generate enough green energy to light up cities.Europe, too, is on the verge of investing billions in hydrogen, potentially the multipurpose clean fuel of the future, which might be generated by wind turbines.At Siemens Gamesa in Brande, a prototype for an even larger wind turbine.Carsten Snejbjerg for The New York TimesWind turbines can potentially generate enough green energy to light up cities.Carsten Snejbjerg for The New York TimesSuch exhilarating innovation, though, sits next to despair-inducing obstacles.Even before the invasion of Ukraine, a tight natural gas market, exacerbated by Russia’s restraining of supplies, had pushed gas and electricity prices to record levels, leading to shutdowns of fertilizer plants and other factories because of high costs. Household energy bills are set to rise by about 50 percent in Britain and drivers across Europe faced shock at the pump.European countries, most notably Germany, had mapped out strategies that relied on increasing dependence on Russian gas and oil in the medium term. That is no longer an option.After the invasion, Olaf Scholz, the chancellor of Germany, halted approval of Nord Stream 2, an $11 billion gas pipeline under the Baltic Sea that directly links Russia to northeastern Germany.As Ursula von der Leyen, the European Commission president, said when she announced a plan on March 8 to make Europe independent of Russian fossil fuels: “We simply cannot rely on a supplier who explicitly threatens us.” The proposal calls for member nations to reduce Russian natural gas imports by two-thirds by next winter and to end them altogether by 2027 — a very tall order.This week, European Union leaders are again meeting to discuss the next phase of proposals, but deep divisions remain over how to manage the current price increases amid anxieties that Europe could face a double whammy of inflation and recession.On Monday, United Nations Secretary General António Guterres warned that intense focus on quickly replacing Russian oil could mean that major economies “neglect or kneecap policies to cut fossil fuel use.”A hydrogen test station near the Siemens Gamesa design center. Hydrogen produced with wind power could be a multipurpose clean fuel of the future.Carsten Snejbjerg for The New York TimesThere are other technological, financial, regulatory and political hurdles. The ability to cheaply generate, transport and store a clean replacement fuel like hydrogen to power trucks, cars and airplanes remains years away.And there is the need to find a better business model.Siemens Gamesa is the world’s leading maker of offshore wind turbines, a key vehicle for achieving climate targets. The company is also working on a giant turbine that would be dedicated solely to producing green hydrogen.Yet, at the company’s offshore design center in Brande, a two-hour drive from Aalborg, the conversations focus on worries as much as bright prospects. The company just replaced its chief executive because of poor financial performance.Industry executives say that despite the huge climate ambitions of many countries, Siemens Gamesa and its competitors are struggling to make a profit and keep the orders coming in fast enough to finance their factories. It doesn’t help that building plants is often a condition for breaking into new markets like the United States, where Siemens Gamesa agreed to erect a facility in Virginia.Morten Pilgaard Rasmussen of Siemens Gamesa says companies like his struggle to get projects approved swiftly.Carsten Snejbjerg for The New York TimesMorten Pilgaard Rasmussen, chief technology officer of the offshore wind unit at Siemens Gamesa, said that companies like his “are now forced to do investments based on the prosperous future that we are all waiting for.”The Russia-Ukraine War and the Global EconomyCard 1 of 6Rising concerns. More