May 17, 2022 - Politics & Policy

Scoop: White House tries to soothe solar probe fallout

Illustration of a worker installing a solar panel in the shape of a question mark on a roof.

Illustration: Aïda Amer/Axios

White House officials told Democratic senators they’re committed to resolving the uncertainty the solar industry is facing because of an investigation into whether China is secretly manufacturing solar panels destined for U.S. markets, Axios has learned.

Why it matters: The Biden administration is trying to mitigate political fallout of its own making. It erupted after the Commerce Department announced an investigation into whether Chinese companies are circumventing U.S. tariffs.

  • The investigation, requested by Auxin Solar, an American solar manufacturer, has effectively frozen big solar panel installation projects — outraging congressional Democrats.
  • They're concerned the threat of retroactive tariffs will prevent big solar projects from taking off, slowing efforts to combat climate change.

What they're saying: "They needed to resolve this yesterday," Sen. Sheldon Whitehouse (D-R.I.) told Axios.

  • "Other than a general sense of quote-unquote 'urgency,' they didn't give a timeline," he said.
  • Sen. Brian Schatz (D-Hawaii) said, "It was a good conversation, but nothing is resolved yet."
  • White House deputy press secretary Andrew Bates told Axios, “Solar industry representatives and advocates have communicated these concerns to us, and we are reviewing our options, consistent with requirements about independence of such investigations.”

Driving the news: National Economic Council director Brian Deese, White House director of legislative affairs Louisa Terrell, and White House deputy national climate adviser Ali Zaidi held a call with nine senators on Tuesday.

The call itself signaled the White House recognized the seriousness of the issue.

  • The officials told the senators they see the crisis facing the solar industry as a core issue of energy and economic security, as well as a supply chain issue.
  • Sens. Jacky Rosen (D-Nev.), Martin Heinrich (D-N.M.), Kyrsten Sinema (D-Ariz.), Catherine Cortez Masto (D-Nev.), Mark Kelly (D-Ariz.), Michael Bennet (D-Colo.) and Tom Carper (D-Del.) were also on the call.

Between the lines: Earlier this month, a bipartisan group of 22 senators wrote to President Biden, urging him to expedite the investigation and bring it to a swift conclusion.

  • About 60 House lawmakers were preparing to send a similar letter on Tuesday.
  • Most solar-panel imports have been halted, leading to more than 300 solar projects being delayed or canceled, according to the Solar Energy Industries Association survey of more than 700 companies.
  • The delays collectively threatened the Biden administration’s renewable energy goals.

The big picture: The Commerce Department began its investigation on March 25 after Auxin Solar filed a petition requesting an inquiry into whether China was circumventing tariffs.

  • “My hands are very tied here,” Commerce Secretary Gina Raimondo said during a Senate Commerce Committee hearing.
  • “I’m required by statute to investigate a claim that companies operating in other countries are trying to circumvent the duties, and I’m required by statute to have a fulsome investigation.”

The other side: “If you support efforts to combat climate change, you should applaud Commerce’s efforts to enforce U.S. trade law and level the playing field for U.S. solar manufacturers fighting against unfair trade practices by China,” said Nick Iacovella, senior vice president of communications for the Coalition for a Prosperous America.

  • The trade association represents U.S. manufacturers and workers and backs the Auxin investigation.

What to watch: As it stands, components substantially transformed by companies in Cambodia, Thailand, Malaysia and Vietnam — but originally from China — are not subject to the tariffs.

  • If the Commerce Department were to determine the panels were not "substantially transformed," they could be slapped with tariffs up to 250%.
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