Solar Energy

More stories

  • 163 Shares199 Views

    in Economy

    Energy Tax Credits, Meant to Help U.S. Suppliers, May Be Hard to Get

    by

    The Inflation Reduction Act contains tax breaks for solar and wind companies to buy American equipment. Qualifying won’t be easy.In April, Vice President Kamala Harris visited Qcells, a solar panel manufacturing facility in Dalton, Ga., to announce an early triumph of the Inflation Reduction Act: Summit Ridge Energy, one of the nation’s largest developers of community solar projects, would purchase 2.5 million U.S.-made solar panels.Subsidies under the new law brought the price in line with that of imported panels, allowing the companies to fight climate change and promote American manufacturing in one fell swoop.A month later, the Treasury Department issued guidance that functionally would require the solar cells — not just the panels — to be made in the United States for Summit Ridge to have confidence that it will get its 10 percent tax credit on installations that use them. Qcells won’t be able to produce cells until late 2024, sending Summit Ridge scrambling to find cheaper components for projects currently in its pipeline.“There’s not a single solar manufacturer who fully qualifies for this at this moment in time, which makes it difficult and is actually starting to cool investment,” said Leslie Elder, Summit Ridge’s vice president of political and regulatory affairs. “Now we have to re-evaluate based on what can pencil.”On paper, the Inflation Reduction Act is transformative for electricity generation in the United States.The law offers tax credits that could cover up to 70 percent of a renewable energy project’s cost if it checks several boxes meant to support American workers and communities. A new analysis finds that those incentives more than offset the additional expense associated with using domestically produced goods and paying prevailing wages.But guidance rolling out from the Biden administration — presaging formal rules — has raised alarm among energy companies that some of the credits might be difficult if not impossible to use, at least in the near term. The resulting frustration is emblematic of the current stage of climate action: an eye-straining haze of technical rule-making that reflects a tension between urgency and ensuring that the benefits of the energy transition are widely shared.Wally Adeyemo, the deputy secretary of the Treasury, expressed confidence that in combination, the rules would strike that balance.“We have a great deal of clarity about the strategic objectives, and we’re already seeing the impact of that in terms of the economy,” Mr. Adeyemo said. “It isn’t about any one rule. It’s about an ecosystem of rules that have been created under the I.R.A. that put us in a position to go from a country that had underinvested in the clean energy transition to being at the head of the pack.”The analysis, overseen by professors at Princeton and Dartmouth experienced in modeling climate policy’s effects, finds that the incentive aimed at U.S. manufacturers makes domestic solar panels more than 30 percent less costly to produce than imports. With incentives claimed by clean energy developers that meet labor standards and use domestic content, the total cost of generating utility-scale solar electricity could be lowered by 68 percent, and onshore wind energy by 77 percent.The study was funded by the BlueGreen Alliance, a partnership of unions and environmental groups. The organization has championed elements of the Biden administration’s climate agenda that support domestic manufacturing, particularly in places hurt by globalization, automation and the decline of fossil fuels.“Until now, the moral case and the business case did not always align,” said Ben Beachy, the organization’s vice president for industrial policy. “The I.R.A. changes that by offering developers an airtight business case for supporting high-paying jobs and a stronger and fairer U.S. manufacturing base.”The impact of the climate law is already evident, with announcements of 47 new plants to make batteries, solar panels and wind turbines since it was passed, according to American Clean Power, a trade association. Other analyses, including a paper by economists and engineers at the Electric Power Research Institute, the Federal Reserve Bank of Minneapolis and the University of California, Berkeley, found that the law would encourage more low-emissions projects eligible for uncapped tax credits than anticipated, potentially making the costs to the government substantially higher than earlier estimates.A recent study found that federal incentives could reduce the total cost of utility-scale onshore wind energy generation by 77 percent.Alisha Jucevic for The New York TimesBut the BlueGreen Alliance’s study shows significant uncertainty about the impact of rising material costs as demand for domestically sourced aluminum, steel and concrete increases, and doesn’t account for profits manufacturers might command before more competition enters the market. It also projects four million more jobs will be available in wind and solar energy by 2035 than if the I.R.A. hadn’t passed — more than eight times the current employment base — but does not model whether labor supply will measure up.“I find some of their key results to be highly optimistic, and that they likely underestimate some of the economywide costs associated with this scale of clean energy deployment,” said Daniel Raimi, a fellow at the think tank Resources for the Future who reviewed the analysis.At the same time, clean energy companies are digesting the administration’s guidance on how the tax credits will be allocated, and finding some unworkable in ways that may slow deployment.Take the bonus of up to 20 percent for developers that locate projects in low-income communities (which is separate from a bonus of 10 percent for locating in areas struggling with the transition away from fossil fuels). The Treasury Department, wanting to ensure that credits give rise to projects that wouldn’t otherwise happen, will award them only to projects not yet completed. Solar installers would have to sell the system and then wait to see if they got the credit before starting work.“I think we will lose some development in low-income communities this year because of the way that credit has been constructed,” said Sean Gallagher, a vice president for policy at the Solar Energy Industries Association. “Either the developer is going to absorb that difference, or they’ll have to go back to the customer to renegotiate the price, or the project’s not going to happen.”An even thornier issue is the extra 10 percent for using domestically manufactured components. Manufacturers are concerned that while effectively requiring solar cells to be made in the United States to qualify for the credit, the Treasury Department did not require their foundational component — the wafer, a thin slice of silicon that conducts energy — to be domestically produced. That could allow Chinese factories to continue to dominate a key part of the supply chain.“The prices they’re ultimately getting from the developers are undermined because the Chinese wafer manufacturers can crash the prices,” said Mike Carr, the executive director of the Solar Energy Manufacturers for America Coalition.Developers are upset because receiving the credit will, in most cases, require a complex calculation of the cost of each component to reach the threshold of 40 percent U.S.-produced content, and manufacturers are loath to disclose sensitive pricing information. Many also expected a more gradual phase-in process that would allow some of the current U.S. factory output to qualify for the credit, while planning for more stringent requirements.Brett Bouchy is the chief executive of Freedom Forever, a residential solar installation company that did more than $1 billion in business last year. He had planned to build a solar module and cell manufacturing plant in Arizona, which would cost $100 million and employ 1,000 people, to supply his own operations. After the guidance came out, he halted those plans — he couldn’t be confident his panels would qualify for the domestic content credit on top of the 7 cents per watt available to manufacturers.“We cannot make it work,” Mr. Bouchy said. “There is no benefit, because that 7 cents is eaten up with increased U.S. labor costs. Why would you invest $100 million when you really can’t get a return?”Those who support the administration’s approach emphasize that the bonus tax credits are just that: bonuses, not requirements, to offset costs associated with going the extra mile. Developers already get a 30 percent base incentive — and at least 10 years of certainty — for paying prevailing wages and employing apprentices, which most don’t consider very difficult.Todd Tucker, the director of industrial policy and trade at the Roosevelt Institute, said high standards were necessary to make investors confident that new U.S. factories would have enough orders to stay in business.“Once you start indicating that you’re going to allow some flexibility, that, by definition, softens the market signal,” he said.The Treasury Department is still taking comments on the rules for all of the credits, and industry trade associations are vying to change them. Even so, most companies say that the Inflation Reduction Act overall is a powerful force for decarbonization, and that companies have a strong incentive to seek every credit it allows.“It’s amazing how focusing this is for the mind, when people start throwing these kinds of dollars around,” said Sheldon Kimber, the chief executive of Intersect Power, a clean energy developer. “We’re being asked to do a hard thing, but there’s a lot of money in it for us.” More

  • 150 Shares189 Views

    in Economy

    U.S. Solar Makers Criticize Biden’s Tax Credits as Too Lax on China

    by

    U.S.-based manufacturers of solar products say rules issued by the Biden administration on Friday will “cement China’s dominance” over the solar industryBiden administration rules released on Friday that will determine which companies and manufacturers can benefit from new solar industry tax credits are being criticized by U.S.-based makers of solar products, who say the guidelines do not go far enough to try to lure manufacturing back from China.The rules stem from President Biden’s sweeping clean energy bill, which offers a mix of tax credits and other incentives to try and spur the construction of more solar factories in the United States and reduce the country’s reliance on China for clean energy goods needed to mitigate climate change.The Treasury Department, in guidance issued on Friday, said it would offer a 10 percent additional tax credit for facilities assembling solar panels in the United States, even if they import the silicon wafers used to make those panels from foreign countries. Under the Biden administration’s new climate legislation, solar and wind farms can apply for a 30 percent tax credit on the costs of their facilities.Senior administration officials told reporters on Thursday that they were trying to take a balanced approach, one that leaned toward forcing supply chains to return to the United States. But China’s dominance of the global solar industry has created a tricky calculus for the Biden administration, which wants to promote U.S. manufacturing of solar products but also ensure a plentiful supply of low-cost solar panels to reduce carbon emissions.The officials said that the Biden administration would have the leeway to change the rules when American supply chains become stronger.“The domestic content bonus under the Inflation Reduction Act will boost American manufacturing, including in iron and steel, so America’s workers and companies continue to benefit from President Biden’s Investing in America agenda,” Treasury Secretary Janet L. Yellen said in a statement. “These tax credits are key to driving investment and ensuring all Americans share in the growth of the clean energy economy.”Critics said the new rules would not go far enough to give companies incentives to move the solar supply chain out of China.Mike Carr, the executive director of the Solar Energy Manufacturers for America Coalition, which includes solar companies with U.S. operations like Hemlock Semiconductor, Wacker Chemie, Qcells and First Solar, called the move “a missed opportunity to build a domestic solar manufacturing supply chain.”“The simple fact is today’s announcement will likely result in the scaling back of planned investments in the critical areas of solar wafer, ingot, and polysilicon production,” he said in a statement. “China is producing 97 percent of the world’s solar wafers — giving them substantial control over both polysilicon and cell production. We fear that this guidance will cement their dominance over these critical pieces of the solar supply chain.”A four-acre solar rooftop in Los Angeles. The Biden administration wants 100 percent of the nation’s electricity to come from carbon-free energy sources by 2035.Mario Tama/Getty ImagesThe Biden administration has set an ambitious goal of generating 100 percent of the nation’s electricity from carbon-free energy sources by 2035, a goal that may require more than doubling the annual pace of solar installations.The United States still relies heavily on Chinese manufacturers for low-cost solar modules, although many Chinese-owned factories now make these goods in Vietnam, Malaysia and Thailand.China also supplies many of the key components in solar panels, including more than 80 percent of the world’s polysilicon, which most solar panels use to absorb energy from sunlight. And a significant portion of Chinese polysilicon comes from the Xinjiang region, where the U.S. government has banned imports because of concerns over forced labor.Other companies in the solar supply chain, which rely on imported components, were more positive about the Treasury Department’s guidance.Abigail Ross Hopper, the chief executive of the Solar Energy Industries Association, said the guidance was an important step forward that would “spark a flood of investment in American-made clean energy equipment and components.”“The U.S. solar and storage industry strongly supports onshoring a domestic clean energy supply chain, and today’s guidance will supplement the manufacturing renaissance that began when the historic Inflation Reduction Act passed last summer,” she said.Congressional Republicans have already targeted the Biden administration’s climate legislation, saying that it fails to set tough guidelines against manufacturing in China and that it may funnel federal dollars to Chinese-owned companies that have set up in the United States.The Biden administration is also dispensing funding to build up the semiconductor and electric vehicle battery industries. Guidelines for that money include limits on access to so-called foreign entities of concern, like Chinese-owned companies. But the Inflation Reduction Act does not contain guardrails against federal dollars going to the U.S. operations of Chinese solar companies.In a congressional hearing on April 25, Representative Jason Smith, chairman of the House Ways and Means Committee, pointed to the Florida facilities of JinkoSolar, a Chinese-owned manufacturer, as being eligible for federal tax credits.“Work at the plant involves robots placing strings of solar cells — which are largely sourced from China — onto a solar panel base,” a fact sheet released by Mr. Smith said.Mr. Biden has also clashed with domestic solar manufacturers over a separate trade case that would see tariffs imposed on solar products imported from Chinese companies based in Southeast Asia.Mr. Biden’s decision to waive the tariffs for two years angered Republicans and some Democrats in Congress, who said U.S.-based manufacturers deserved more protection. In recent weeks, the House and Senate approved a measure to reverse the president’s decision, which Mr. Biden is expected to veto. More

  • 100 Shares99 Views

    in Economy

    Chinese Solar Makers Evaded U.S. Tariffs, Investigation Finds

    by

    The Biden administration pre-emptively halted any penalties from the case in June, prompting critics to say the administration had shortcut its own trade rulesWASHINGTON — U.S. officials have determined that four of eight major Chinese solar companies under investigation in recent months tried to evade tariffs by funneling products into the United States through Southeast Asian countries, in a trade case that has pitted clean energy advocates against domestic solar panel manufacturers.The decision applies to the Thailand operations of Canadian Solar and Trina Solar, as well as BYD Cambodia and Vina Solar Vietnam, according to documents published by the Department of Commerce Friday morning.The ruling centered around esoteric trade laws that aim to protect American manufacturers from unfairly cheap foreign products. But more broadly, the case is related to an increasingly difficult question confronting U.S. policymakers: how quickly the United States can expect to wean itself off China’s supply of materials that are crucial for the American economy, including the solar panels that are needed for a transition to green energy.The investigation, initiated at the request of a small California-based company named Auxin Solar, centered on whether Chinese companies have been trying to bypass tariffs that the United States imposed on cheap solar panels imported from China. In recent years, Chinese solar companies have significantly expanded their manufacturing presence in Southeast Asian countries that do not face the same tariffs.The trade case rests on whether the Chinese companies are actually using these Southeast Asian countries as a significant site of manufacturing, or if they are just making minor changes to products that are largely made in China to try to get around U.S. trade rules.Other companies that were also under investigation — namely New East Solar Cambodia, Hanwha Q CELLS Malaysia, Jinko Solar Malaysia and the Vietnam operations of Boviet Solar — were found not to be violating U.S. trade rules.Typically, companies that are found to be circumventing U.S. tariffs would immediately be subject to higher duty rates to bring their products into the United States. But in an unusual measure, the Biden administration in June pre-empted those higher duties by announcing a two-year pause on any tariff increases on solar products.The administration said its decision to halt additional tariffs would help ensure that the United States has enough solar panels as it tries to reduce its reliance on fossil fuels in the months to come. The Biden administration has set an ambitious goal of generating 100 percent of the nation’s electricity from carbon-free energy sources by 2035, a goal that may require more than doubling the annual pace of solar installations.But domestic manufacturing groups have criticized the president’s decision to halt any imposition of tariffs, saying he is failing to enforce America’s trade rules and crack down on unfair Chinese practices.Solar importers, too, have expressed dissatisfaction with the decision, saying that the two-year pause is not enough time to establish sufficient manufacturing capacity outside China to meet rising U.S. demand.Enormous planned investments in solar energy have raised the stakes of the debate. The Inflation Reduction Act, a sweeping new climate law signed by President Biden in August, provides roughly $37 billion in incentives for companies to produce solar panels, wind turbines, batteries and other crucial minerals in the United States, aiming to reverse the longstanding migration of clean energy manufacturing to China and elsewhere.The clash is the latest chapter in a decade-long conflict between the United States and China over the solar industry. In 2012, the United States began imposing duties on Chinese solar panels, arguing that Chinese manufacturers were unfairly selling their products in the United States at prices below the cost of production. Chinese solar manufacturers shifted their operations to Taiwan instead, but the United States soon expanded its tariffs to apply to Taiwan, as well.In recent years, Chinese companies have set up new manufacturing operations in Southeast Asia, and exports of solar products to the United States from Vietnam, Malaysia, Thailand and Cambodia have exploded. In many cases, these factories appear to rely on raw materials sourced largely from China, like polysilicon.That business model has proved problematic in more ways than one. The U.S. government has found that major Chinese producers of polysilicon and solar products are guilty of using forced labor in the Xinjiang region of China and has banned any products using that polysilicon from the United States.Auxin Solar and other domestic manufacturers have also said that the boom in business in Southeast Asia was an attempt by Chinese companies to evade the duties that the United States had imposed on Chinese products.In a preliminary decision on the case on Friday, officials at the Commerce Department agreed, at least for some cases. The Commerce Department will now require solar companies exporting to the United States from Thailand, Malaysia, Vietnam and Cambodia to certify that a significant proportion of their materials are coming from outside China. Otherwise, companies in those countries will be subject to the same duties paid by their Chinese suppliers starting in 2024. The Commerce Department will continue to review the case and issue its final decision on the matter on May 1, 2023.Mamun Rashid, the chief executive of Auxin Solar, said in a statement that the findings “largely validated and confirmed Auxin’s allegations of Chinese cheating.”“We will continue to press forward in these cases as they continue to make sure all trade cheats are playing by the rules,” he said.Abigail Ross Hopper, the chief executive of the Solar Energy Industries Association, which opposed the investigation, said the group was “obviously disappointed that commerce elected to exceed its legal authority” by ruling against the imports from Southeast Asia.“This decision will strand billions of dollars’ worth of American clean energy investments and result in the significant loss of good-paying, American, clean energy jobs,” she said, adding, “This is a mistake we will have to deal with for the next several years.”Major solar importers have complained for months of difficulties obtaining enough solar panels to meet growing demand for clean energy solutions. George Hershman, the chief executive of SOLV Energy, a large solar contracting firm that has provided engineering, construction and maintenance services for projects across 26 states, said the decision was likely to disrupt an industry that has already been reeling from supply chain constraints in recent years.“The upside is that commerce took a nuanced approach to exempt a number of manufacturers rather than issuing a blanket ban of all products from the targeted countries,” Mr. Hershman said. “While it’s positive that companies will be able to access some of the crucial materials we need to deploy clean energy, it’s still true that this ruling will further constrict a challenged supply chain.”Some members of the Biden administration are sympathetic to these arguments. In a hearing in May before the Senate Energy Committee, Jennifer M. Granholm, the secretary of energy, said the investigation put at stake “the complete smothering of the investment and the jobs and the independence that we would be seeking as a nation to get our fuel from our own generation sources.”The investigation was under the purview of the Department of Commerce, not the Department of Energy, she said. “But I am certainly deeply concerned about the goal of getting to 100 percent clean electricity by 2035 if this is not resolved quickly.”But the Biden administration’s decision to effectively neutralize the trade investigation by halting any additional tariffs that would result from it until June 2024 has also attracted its share of criticism.Along with the small group of solar manufacturers who do not have ties to China, groups that lobby in favor of domestic manufacturing have protested the Biden administration’s taking action in a type of trade decision that is typically independent and quasi-judicial.“This is illegal activity that is directly harming our companies. That’s why we have trade laws,” said Nick Iacovella, the communications director for the Coalition for a Prosperous America, which called Friday for the Biden administration to rescind its emergency declaration halting the tariffs. “There’s absolutely no reason we should allow the Chinese to continue illegal activity for two years.”In a letter to the Biden administration in July, Democratic lawmakers, including Daniel T. Kildee of Michigan, also criticized the decision to pause the tariffs, saying it would undercut “existing and planned domestic solar manufacturing investments, hurting American workers and companies.”Trade remedy laws are one of the only tools available to defend American manufacturers and “should not be undermined,” they wrote.But other lawmakers called on Friday for an extension of the two-year pause on tariffs. Eight Democratic senators, led by Jacky Rosen from Nevada, said solar projects needed access to more basic components to operate.The debate is taking on increasing urgency now that the United States is preparing to make huge investments in its clean energy industry, through bills such as the Inflation Reduction Act.Analysts say it will still take time for the United States to be independent of foreign solar imports. In 2021, the United States had the capacity to manufacture roughly 7.5 gigawatts’ worth of solar modules a year, according to industry figures.In the wake of the passage of the new climate law, several companies have announced plans to increase that capacity by another 20 gigawatts a year over the coming decade, according to ClearView Energy Partners, a Washington research firm.But solar companies are expected to install far more than that — nearly 40 gigawatts worth of solar capacity in 2023, according to government forecasts — spurred on by other tax breaks for solar power in the new climate law. And the country still lacks the capacity to produce solar cells and wafers, key components that are primarily produced overseas.“Therefore, domestic solar panel manufacturers appear likely to rely heavily on an overseas supply chain after” any tariffs are potentially put in place by the end of 2024 as a result of the Commerce Department’s decision, the analysts at ClearView concluded. More

  • 163 Shares99 Views

    in Economy

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

    by

    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

  • 125 Shares179 Views

    in Economy

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

    by

    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

  • 100 Shares189 Views

    in Economy

    President Biden extends solar tariffs, with major caveats.

    by

    WASHINGTON — President Biden announced Friday that he would extend tariffs on imported solar products first imposed during the Trump administration but would reduce the scope of products affected by the levies, a decision aimed at balancing his goals for bolstering domestic manufacturing with speeding up the transition toward clean energy.The decision will impose a tariff of between 14 percent and 15 percent for the next four years on imported crystalline silicon solar products that are used to convert sunlight to energy. But the Biden administration also moved to double the amount of solar cells that can come into the country without facing tariffs, and it said it would begin talks with Canada and Mexico to allow them to export their products to the United States duty-free.The administration also said it would exempt a certain type of two-sided panel, called bifacial panels, from the levies to help ensure that solar deployment in the United States continues at the pace and scale needed to meet the president’s clean energy targets.The carve-outs will maintain some protection for domestic industry while also allowing solar energy projects to continue accessing some cheaper foreign solar products. But they also angered some domestic manufacturers and labor leaders, who argued that the administration should be doing more to shield American manufacturers from cheap Chinese products.Mark Widmar, the chief executive of First Solar, a solar panel manufacturer in the United States that had fought for tougher restrictions on imported products, said he was “deeply disappointed” in the decision and that it would allow China “to outflank American efforts to grow self-reliant solar supply chains.”“Today’s decision places at risk billions of dollars in existing investment, thousands of jobs, our country’s energy security and a climate-critical transition to net-zero emissions,” he added.Companies that install solar power projects using foreign panels praised the decision to scale back the tariffs.“Every dollar spent on tariffs means less dollars put toward creating jobs and opportunity in communities,” said George Hershman, the chief executive of SOLV Energy, the nation’s largest utility-scale solar installer. “The bifacial exclusion will help us greenlight projects and deploy more solar capacity across the country.”The solar industry worked for the last three years to preserve the exclusion of bifacial panels from the tariff, though it had hoped for broader action that would remove the tariffs entirely.Abigail Ross Hopper, chief executive of the Solar Energy Industries Association, said her group was disappointed with the decision to extend the tariffs but called the administration’s move a “balanced solution.”Mr. Biden has pledged to cut U.S. emissions at least 52 percent below 2005 levels by the end of this decade, and the administration is counting on solar to play a significant role in reducing emissions from electricity production. A recent Energy Department report found that solar energy could provide up to 40 percent of the nation’s electricity by 2035, compared with its current 4 percent.But much of the world’s supply of solar panels comes from China — creating a quandary for an administration that has described China as America’s foremost geopolitical and economic competitor.China has pumped vast amounts of government funding into renewable energy industries. It now dominates all stages of the solar supply chain, producing between 60 and 80 percent of the world’s polysilicon, wafers, crystalline silicon cells and solar modules, according to Wood Mackenzie, a research and consulting firm.American solar manufacturers have struggled to compete with low-cost products from China, even as U.S. demand for solar power has surged. The production capacity of American solar manufacturers stood at just four gigawatts last year, enough to satisfy just one-fifth of the country’s installations.Xiaojing Sun, the head of global solar research at Wood Mackenzie, said some new manufacturing plants had opened since the tariffs were imposed, like Jinko Solar’s facility in Florida, LG Electronics’ in Alabama and Hanwha Q CELLS USA’s in Georgia. And some existing companies, like First Solar, had expanded operations.At the same time, the U.S. solar market grew to about 20 gigawatts last year from 11 gigawatts four years before, meaning even as domestic manufacturers contributed more supply they did not gain more market share with the tariffs in place, she said.“It wasn’t enough to turn the tide,” Ms. Sun said. “The amount of market that is met by domestic manufacturing is pretty small.”The issue of how to treat imported solar products has divided some of the administration’s traditional allies. Labor unions, along with those who prioritize efforts to build a domestic solar industry and reduce trade with China, have been pitted against solar energy developers and others who see combating climate change as among the administration’s most important tasks.Those divisions have been mirrored inside the Biden administration, where climate and trade officials have at times clashed over how tightly to curb Chinese imports.China’s solar industry has also been tarred by its reliance on components sourced from Xinjiang, where the Chinese government carries out mass detentions of minority groups.An administration ban imposed last year on solar products made with material from one Chinese company accused of using forced labor in Xinjiang brought tens of billions of dollars of U.S. solar installations to a halt, industry groups said. In June, a new law that strengthens the prohibitions on importing goods from Xinjiang will cast that net even wider.In a joint statement with other Ohio lawmakers, the state’s senators, Sherrod Brown, a Democrat, and Rob Portman, a Republican, called Mr. Biden’s tariff announcement “a disappointing, misguided decision.”“The administration is missing the best opportunity in a generation to ensure the United States leads the way in manufacturing solar supply chain components,” the senators said.The solar tariff announcement came as the House of Representatives voted Friday morning to approve a bill that would devote nearly $300 billion toward scientific research, including $600 million in grants and loans to solar manufacturing. The Biden administration has also proposed substantial tax credits and other measures to spur the solar industry as part of its Build Back Better Act, but that legislation remains mired in Congress.The solar tariffs were first imposed in February 2018, with President Donald J. Trump following a recommendation of the International Trade Commission, an independent panel that reviews trade cases. The tariffs started at 30 percent and were set to decline by 5 percentage points each year over the course of four years.Those tariffs would have expired this month. But several manufacturers, including Auxin Solar, Suniva, Hanwha, LG and Mission Solar Energy, petitioned to extend the levies, arguing they were still needed.In its announcement on Friday, the Biden administration doubled the amount of cells that could be imported into the United States duty-free to five gigawatts, saying the change would give domestic manufacturers that use the cells to make solar panels the supplies they need to be competitive.But some critics said that change, along with the exclusion for bifacial panels, would gut protections for the domestic industry. In a note to clients on Tuesday, Julien Dumoulin-Smith, a research analyst at Bank of America Merrill Lynch, said that tariffs with those carve-outs “would be largely toothless.”A senior administration official pushed back on those claims on Friday, arguing that the decision would help create jobs, reduce American dependence on foreign suppliers and meet ambitious clean energy goals.The White House had been consulting with all sectors of the solar industry, and they all agreed that the tariffs on their own would not bring back solar cell production or increase module production to a point where it could supply U.S. needs, the Biden official said.Ana Swanson reported from Washington, and Ivan Penn from Los Angeles. More

  • 125 Shares199 Views

    in Economy

    U.S. Effort to Combat Forced Labor Targets Corporate China Ties

    by

    The Biden administration is expected to face scrutiny as it decides how to enforce a new ban on products made with forced labor in the Xinjiang region of China.A far-reaching bill aimed at barring products made with forced labor in China became law after President Biden signed the bill on Thursday.But the next four months — during which the Biden administration will convene hearings to investigate how pervasive forced labor is and what to do about it — will be crucial in determining how far the legislation goes in altering the behavior of companies that source products from China.While it is against U.S. law to knowingly import goods made with slave labor, the Uyghur Forced Labor Prevention Act shifts the burden of proof to companies from customs officials. Firms will have to proactively prove that their factories, and those of all their suppliers, do not use slavery or coercion.The law, which passed the House and Senate nearly unanimously, is Washington’s first comprehensive effort to police supply chains that the United States says exploit persecuted minorities, and its impact could be sweeping. A wide range of products and raw materials — such as petroleum, cotton, minerals and sugar — flow from the Xinjiang region of China, where accusations of forced labor proliferate. Those materials are often used in Chinese factories that manufacture products for global companies.“I anticipate that there will be many companies — even entire industries — that will be taken by surprise when they realize that their supply chains can also be traced back to the Uyghur region,” said Laura Murphy, a professor of human rights and contemporary slavery at Sheffield Hallam University in Britain.If the law is enforced as written, it could force many companies to rework how they do business or risk having products blocked at the U.S. border. Those high stakes are expected to set off a crush of lobbying by companies trying to ease the burden on their industries as the government writes the guidelines that importers must follow.“Genuine, effective enforcement will most likely mean there will be pushback by corporations and an attempt to create loopholes,” said Cathy Feingold, the international director of the A.F.L.-C.I.O. “So the implementation will be key.”Behind-the-scenes negotiations before the bill’s passage provided an early indication of how consequential the legislation could be for some of America’s biggest companies, as business groups like the U.S. Chamber of Commerce and brand names like Nike and Coca-Cola worked to limit the bill’s scope.The Biden administration has labeled the Chinese government’s actions in Xinjiang — including the detention of more than a million Uyghurs and other predominantly Muslim minorities, as well as forced conversions, sterilization and arbitrary or unlawful killings — as genocide.Human rights experts say that Beijing’s policies of moving Uyghurs into farms and factories that feed the global supply chain are an integral part of its repression in Xinjiang, an attempt to assimilate minorities and strip them of their culture and religion..css-1xzcza9{list-style-type:disc;padding-inline-start:1em;}.css-3btd0c{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-3btd0c{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-3btd0c strong{font-weight:600;}.css-3btd0c em{font-style:italic;}.css-1kpebx{margin:0 auto;font-family:nyt-franklin,helvetica,arial,sans-serif;font-weight:700;font-size:1.125rem;line-height:1.3125rem;color:#121212;}#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-family:nyt-cheltenham,georgia,’times new roman’,times,serif;font-weight:700;font-size:1.375rem;line-height:1.625rem;}@media (min-width:740px){#NYT_BELOW_MAIN_CONTENT_REGION .css-1kpebx{font-size:1.6875rem;line-height:1.875rem;}}@media (min-width:740px){.css-1kpebx{font-size:1.25rem;line-height:1.4375rem;}}.css-1gtxqqv{margin-bottom:0;}.css-1g3vlj0{font-family:nyt-franklin,helvetica,arial,sans-serif;font-size:1rem;line-height:1.375rem;color:#333;margin-bottom:0.78125rem;}@media (min-width:740px){.css-1g3vlj0{font-size:1.0625rem;line-height:1.5rem;margin-bottom:0.9375rem;}}.css-1g3vlj0 strong{font-weight:600;}.css-1g3vlj0 em{font-style:italic;}.css-1g3vlj0{margin-bottom:0;margin-top:0.25rem;}.css-19zsuqr{display:block;margin-bottom:0.9375rem;}.css-12vbvwq{background-color:white;border:1px solid #e2e2e2;width:calc(100% – 40px);max-width:600px;margin:1.5rem auto 1.9rem;padding:15px;box-sizing:border-box;}@media (min-width:740px){.css-12vbvwq{padding:20px;width:100%;}}.css-12vbvwq:focus{outline:1px solid #e2e2e2;}#NYT_BELOW_MAIN_CONTENT_REGION .css-12vbvwq{border:none;padding:10px 0 0;border-top:2px solid #121212;}.css-12vbvwq[data-truncated] .css-rdoyk0{-webkit-transform:rotate(0deg);-ms-transform:rotate(0deg);transform:rotate(0deg);}.css-12vbvwq[data-truncated] .css-eb027h{max-height:300px;overflow:hidden;-webkit-transition:none;transition:none;}.css-12vbvwq[data-truncated] .css-5gimkt:after{content:’See more’;}.css-12vbvwq[data-truncated] .css-6mllg9{opacity:1;}.css-qjk116{margin:0 auto;overflow:hidden;}.css-qjk116 strong{font-weight:700;}.css-qjk116 em{font-style:italic;}.css-qjk116 a{color:#326891;-webkit-text-decoration:underline;text-decoration:underline;text-underline-offset:1px;-webkit-text-decoration-thickness:1px;text-decoration-thickness:1px;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:visited{color:#326891;-webkit-text-decoration-color:#326891;text-decoration-color:#326891;}.css-qjk116 a:hover{-webkit-text-decoration:none;text-decoration:none;}In a statement last week, Jen Psaki, the White House press secretary, said that Mr. Biden welcomed the bill’s passage and agreed with Congress “that action can and must be taken to hold the People’s Republic of China accountable for genocide and human rights abuses and to address forced labor in Xinjiang.” She added that the administration would “work closely with Congress to implement this bill to ensure global supply chains are free of forced labor.”Yet some members of the administration argued behind closed doors that the bill’s scope could overwhelm U.S. regulators and lead to further supply chain disruptions at a time when inflation is accelerating at a nearly 40-year high, according to interviews with more than two dozen government officials, members of Congress and their staff. Some officials also expressed concerns that an aggressive ban on Chinese imports could put the administration’s goals for fighting climate change at risk, given China’s dominance of solar panels and components to make them, people familiar with the discussions said.John Kerry, Mr. Biden’s special envoy for climate change, and Wendy R. Sherman, the deputy secretary of state, separately conveyed some of those concerns in calls to Democratic members of Congress in recent months, according to four people familiar with the discussions.Senator Marco Rubio, Republican of Florida and one of the bill’s lead authors, criticized those looking to limit its impact, saying that companies that want to continue to import products and officials who are reluctant to rock the boat with China “are not just going to give up.” He added, “They’re all going to try to weigh in on how it’s implemented.”A solar farm near Wenquan, China. The Xinjiang region’s substantial presence in the solar supply chain has been a key source of tension in the Biden administration.Gilles Sabrié for The New York TimesOne reason the stakes are so high is because of the critical role that Xinjiang may play in many supply chains. The region, twice the size of Texas, is rich in raw materials like coal and oil and crops like tomatoes, lavender and hops; it is also a significant producer of electronics, sneakers and clothing. By some estimates, it provides one-fifth of the world’s cotton and 45 percent of the world’s polysilicon, a key ingredient for solar panels.Xinjiang’s substantial presence in the solar supply chain has been a key source of tension in the Biden administration, which is counting on solar power to help the United States reach its goal of significantly cutting carbon emissions by the end of the decade.In meetings this year, Biden administration officials weighed how difficult it would be for importers to bypass Xinjiang and relocate supply chains for solar goods and other products, according to three government officials. Officials from the Labor Department and the United States Trade Representative were more sympathetic to a far-reaching ban on Xinjiang goods, according to three people familiar with the discussions. Some officials in charge of climate, energy and the economy argued against a sweeping ban, saying it would wreak havoc on supply chains or compromise the fight against climate change, those people said.Ana Hinojosa, who was the executive director of Customs and Border Protection and led the government’s enforcement of forced labor provisions until she left the post in October, said that agencies responsible for “competing priorities” like climate change had voiced concerns about the legislation’s impact. Companies and various government agencies became nervous that the law’s broad authorities could prove “devastating to the U.S. economy,” she said.“The need to improve our clean energy is real and important, but not something that the government or the U.S. should do on the backs of people who are working under conditions of modern-day slavery,” Ms. Hinojosa added.In a call with Speaker Nancy Pelosi of California this year, Mr. Kerry conveyed concerns about disrupting solar supply chains while Ms. Sherman shared her concerns with Senator Jeff Merkley, Democrat of Oregon, according to people familiar with the conversations.Mr. Merkley, one of the lead sponsors of the bill, said in an interview that Ms. Sherman told him she was concerned the legislation was not duly “targeted and deliberative.” The conversation was first reported by The Washington Post.“I think this is a targeted and deliberative approach,” Mr. Merkley said. “And I think the administration is starting to see how strongly Republicans and Democrats in both chambers feel about this.”A State Department official said that Ms. Sherman did not initiate the call and did not express opposition to the bill. Whitney Smith, a spokeswoman for Mr. Kerry, said any accusations he lobbied against the Uyghur Forced Labor Prevention Act were “false.” Ms. Pelosi declined to discuss private conversations.Nury Turkel, a Uyghur-American lawyer who is the vice chairman of the U.S. Commission on International Religious Freedom, said the United States must “tackle both genocide and ecocide.”“Policymakers and climate activists are making it a choice between saving the world and turning a blind eye to the enslavement of Uyghurs,” he said. “It is false, and we cannot allow ourselves to be forced into it.”Administration officials have also argued that the United States can take a strong stance against forced labor while developing a robust solar supply chain. Emily Horne, a spokeswoman for the National Security Council, said that Mr. Biden “believes what is going on in Xinjiang is genocide” and that the administration had taken a range of actions to combat human rights abuses in the region, including financial sanctions, visa restrictions, export controls, import restrictions and a diplomatic boycott of the 2022 Beijing Olympics in February.“We have taken action to hold the P.R.C. accountable for its human rights abuses and to address forced labor in Xinjiang,” Ms. Horne said, using the abbreviation for the People’s Republic of China. “And we will continue to do so.”Farm workers picking cotton near Qapqal, China, in 2015. By some estimates, Xinjiang produces one-fifth of the world’s cotton.Adam Dean for The New York TimesThe law highlights the delicate U.S.-China relationship, in which policymakers must figure out how to confront anti-Democratic practices while the United States is economically dependent on Chinese factories. China remains the largest supplier of goods to the United States.One of the biggest hurdles for U.S. businesses is determining whether their products touched Xinjiang at any point in the supply chain. Many companies complain that beyond their direct suppliers, they lack the leverage to demand information from the Chinese firms that manufacture raw materials and parts.Government restrictions that bar foreigners from unfettered access to sites in Xinjiang have made it difficult for many businesses to investigate their supply chains. New Chinese antisanctions rules, which threaten penalties against companies that comply with U.S. restrictions, have made vetting even more difficult.The Chinese government denies forced labor is used in Xinjiang. Zhao Lijian, a government spokesman, said U.S. politicians were “seeking to contain China and hold back China’s development through political manipulation and economic bullying in the name of ‘human rights.’” He promised a “resolute response” if the bill became law.Lawmakers struggled over the past year to reconcile a more aggressive House version of the legislation with one in the Senate, which gave companies longer timelines to make changes and stripped out the S.E.C. reporting requirement, among other differences.The final bill included a mechanism to create lists of entities and products that use forced labor or aid in the transfer of persecuted workers to factories around China. Businesses like Apple had lobbied for the creation of such lists, believing they would provide more certainty for businesses seeking to avoid entities of concern.Lisa Friedman More

  • 113 Shares99 Views

    in Economy

    Are Tesla and Texas a Perfect Match? It’s Questionable.

    by

    While its C.E.O., Elon Musk, and the state’s conservative lawmakers share libertarian sensibilities, they differ greatly on climate change and renewable energy.Tesla’s move from Silicon Valley to Texas makes sense in many ways: The company’s chief executive, Elon Musk, and the conservative lawmakers who run the state share a libertarian philosophy, favoring few regulations and low taxes. Texas also has room for a company with grand ambitions to grow.“There’s a limit to how big you can scale in the Bay Area,” Mr. Musk said Thursday at Tesla’s annual meeting hosted at its new factory near the Texas capital. “Here in Austin, our factory’s like five minutes from the airport, 15 minutes from downtown.”But Texas may not be the natural choice that Mr. Musk makes it out to be.Tesla’s stated mission is to “accelerate the world’s transition to sustainable energy,” and its customers include many people who want sporty cars that don’t spew greenhouse gases from their tailpipes. Texas, however, is run by conservatives who are skeptical of or oppose efforts to address climate change. They are also fiercely protective of the state’s large oil and gas industry.And, despite the state’s business-friendly reputation, Tesla can’t sell vehicles directly to customers there because of a law that protects car dealerships, which Tesla does not use.Tesla’s move is not surprising: Mr. Musk threatened to leave California in May 2020 after local officials, citing the coronavirus, forced Tesla to shut down its car factory in the San Francisco Bay Area. But his decision to move to Texas highlights some gaping ideological contradictions. His company stands at the vanguard of the electric car and renewable energy movement, while Texas’ lawmakers, who have welcomed him enthusiastically, are among the biggest resisters to moving the economy away from oil and natural gas.“It’s always a feather in Texas’ hat when it takes a business away from California, but Tesla is as much unwelcome as it is welcome,” said Jim Krane, an energy expert at Rice University in Houston. “It’s an awkward juxtaposition. This is a state that gets a sizable chunk of its G.D.P. from oil and gas and here comes a virulent competitor to that industry.”In February, a rare winter storm caused the Texas electric grid to collapse, leaving millions of people without electricity and heat for days. Soon after, the state’s leaders sought — falsely, according to many energy experts — to blame the blackout on renewable energy.“This shows how the Green New Deal would be a deadly deal for the United States of America,” Gov. Greg Abbott said of the blackout on Fox News. “It just shows that fossil fuel is necessary for the state of Texas as well as other states to make sure we will be able to heat our homes in the wintertimes and cool our homes in the summertimes.”Mr. Musk, a Texas resident since last year, seemed to offer a very different take on Thursday, suggesting that renewable energy could in fact protect people from power outages.“I was actually in Austin for that snowstorm in a house with no electricity, no lights, no power, no heating, no internet,” he said. “This went on for several days. However, if we had the solar plus Powerwall, we would have had lights and electricity.”Tesla is a leading maker of solar panels and batteries — the company calls one of its products Powerwall — for homeowners and businesses to store renewable energy for use when the sun has gone down, when electricity rates are higher or during blackouts. The company reported $1.3 billion in revenue from the sale of solar panels and batteries in the first six months of the year.Mr. Musk’s announcement that Tesla would be moving its headquarters from Palo Alto, Calif., came with few details. It is not clear, for example, how many workers would move to Austin. It’s also unknown whether the company would maintain a research and development operation in California in addition to its factory in Fremont, which is a short drive from headquarters and which it said it would expand. The company has around 750 employees in Palo Alto and about 12,500 in total in the Bay Area, according to the Silicon Valley Institute for Regional Studies.It is also not clear how much money Tesla will save on taxes by moving. Texas has long used its relatively low taxes, which are less than California’s, to attract companies. County officials have already approved tax breaks for the company’s new factory, and the state might offer more.Over the years, California granted Tesla hundreds of millions of dollars in tax breaks, something that Gov. Gavin Newsom noted on Friday. But because Tesla will continue to have operations in California, it may still have to pay income tax on its sales in the state, said Kayla Kitson, a policy analyst at the California Budget & Policy Center.Whatever incentives they offer Tesla, Texas officials are not likely to change their support for the fossil fuel industries with which the company competes.In a letter to state regulators in July, Mr. Abbott directed the Public Utility Commission to incentivize the state’s energy market “to foster development and maintenance of adequate and reliable sources of power, like natural gas, coal and nuclear power.”A Tesla factory under construction in Austin in September.Joe White/ReutersThe governor also ordered regulators to charge suppliers of wind and solar energy “reliability” fees because, given the natural variability of the wind and the sun, suppliers could not guarantee that they would be able to provide power when it was needed.Mr. Abbott’s letter made no mention of battery storage, suggesting that he saw no role for a technology that many energy experts believe will become increasingly important in smoothing out wind and solar energy production. Tesla is a big player in such batteries. Its systems have helped electric grids in California, Australia and elsewhere, and the company is building a big battery in Texas, too, Bloomberg reported in March.Texas has no clean energy mandates, though it has become a national leader in the use of solar and wind power — driven largely by the low cost of renewable energy. The state produces more wind energy than any other.Another issue that divides Tesla and Texas is the state’s law about how cars can be sold there.As in some other states, Texas has long had laws to protect car dealers by barring automakers, including Tesla, from selling directly to consumers. California, the company’s biggest market by far, has long allowed the company to sell cars directly to buyers, which lets it earn more money than if it had to sell through dealers.Tesla has showrooms around Texas, but employees are not even allowed to discuss prices with prospective buyers and the showrooms cannot accept orders. Texans can buy Teslas online and pick the vehicles up at its service centers.Once the Austin factory starts producing vehicles, including a new pickup truck Tesla calls Cybertruck, those vehicles will have to leave the state before they can be delivered to customers in Texas.Efforts to change the law by Tesla and some state lawmakers have gone nowhere, including during the legislative session that concluded this year. That’s partly because car dealers have tremendous political influence in the state.Perhaps once Tesla has moved to Austin and started producing cars, Mr. Musk might have enough political clout to get the Legislature to act. Texas lawmakers typically meet only every two years, however, so it would most likely take at least until 2023 for the company’s customers to receive a car directly from its factory there.Michael Webber, professor of mechanical engineering at the University of Texas at Austin, said Mr. Musk’s decision to move to Texas might have been influenced in part by the ability to pressure the state to change its law.“The Texas car market is the second-largest car market in America after California, so if you are selling cars it kind of makes sense to get closer to your customers,” Mr. Webber said. “The Texas car market is particularly difficult outside of cities because of the legislative barriers.”There were already signs on Friday that some in Texas, including those involved in oil and gas and related industries, were happy to have Tesla because it could eventually employ thousands of people.“It can only be positive for Texas, because it brings more business to Texas,” said Linda Salinas, vice president for operations at Texmark Chemicals, which is near Houston. “Even though it’s not fossil business, it’s still business.”She said Texmark might even benefit from Tesla’s manufacturing operations in the state. “Texmark produces and sells mining chemicals to people who mine copper, and guess what batteries are made out of?”Peter Eavis More