ITC proposes 3 solar trade case remedies with tariffs, quotas and capped imports
- The International Trade Commission issued three remedy recommendations for a high-profile trade case over import relief for foreign crystalline silicon photovoltaic (CSPV) modules and cells, composed of a variety of tariffs, quotas and an import licensing fee.
- The proposals ranged from a licensing fee to as much as a 35% tariff on CSPV modules. None of the recommendations came close to the proposals by petitioners SolarWorld and Suniva.
- The ITC has until Nov. 13 to send a more detailed report to President Donald Trump, who will then have the ultimate say in whether or not he imposes the ITC remedies, or chooses his own.
The ITC's series of remedies are all over the map, but none come close to the proposals from SolarWorld and Suniva, two companies who petitioned the agency for import relief in April under a Section 201 investigation of the 1974 Trade Act. The commission suggested that each the remedies remain in place for four years — the full timeline under Section 201, although there is an option to extend them an additional four years.
ITC Chairman Rhonda Schmidtlein, a Democrat appointed by former President Obama, was perhaps the most severe in her proposed remedies. She proposed a combination of tariff and quotas on cells, with a rate of 10% and set the first-year quota at 0.5 GW (500 MW). On imports past the 0.5 GW limit, the commissioner recommended a 30% tariff, which would be "incrementally reduced" as the quota is raised.
For modules, Schmidtlein proposed the highest tariff to date, with a 35% rate that would be reduced over the four-year span; she didn't specify how the rate would be reduced.
Commissioner Meredith Broadbent, a Republican appointed by Obama, proposed to cap imports at 8.9 GW per year, and increase that amount by 1.4 GW in the four-year span. Broadbent took up an import licensing fee suggested by Solar Energy Industries Association, a staunch opponent of the tariffs. Per Broadbent's suggestion, import licenses would be sold at an auction at a penny/watt, and bring in roughly $89 million in government revenue the first year, rising $14 million in successive years.
Commissioners David Johanson, a Republican appointed by Obama, and Irving Williamson, a Democrat appointed by President George W. Bush, jointly proposed a quota and tariff on imported cells, with the first 1 GW of imports exempt. Once they exceed the 1 GW limit, an tariff of 30% should be imposed. Both commissioners recommended the tariff rate be reduced 5% while the quota is raised by 200 MW per year.
For modules, Johanson and Williamson proposed a 30% tariff that would phase down in 5% increments over a four-year span. This proposal could be the most notable to watch, since it carries the weight of two commissioners, as Axios notes.
According to MJ Shiao, head of Americas Research at GTM Research, a 30% tariff pencils out between $0.10 and $0.15/watt — well below its worse case scenario modeled in a recent report.
For context, 30% tariff on modules would be $0.10/W-$0.15/W. Will hurt projects on the cusp, but not overly destructive to installs— MJ Shiao (@solarmj) October 31, 2017
According to GTM, a $0.10/watt scenario would reduce utility-scale solar installations by 9%.
Suniva proposed a $0.25/watt tariff for solar cells that would drop to $0.235/watt over a four-year span. For modules, the company proposed tariffs starting at $0.32/watt for solar modules, which would fall to $0.29/watt in the same timeframe.
Suniva also proposed a declining floor price of $0.74/watt for solar modules that would end at $0.64/watt after four years. SolarWorld requested quotas of 0.22 GW on imported cells and 5.7 GW on imported modules in 2018, which would also ratchet down in the same timeframe. Both petitioners told the ITC they want a combination of tariff and quota or floor price that would remain in place for the full four years.
But it's unclear how the ITC plans to base its rates for the tariffs, which can be no more than 50%. Suniva and SolarWorld requested the remedies calculate the tariffs based on prices in 2014 and 2015 — which could bring those tariffs up to the level the companies proposed, as PV Magazine noted. But if the rates are based on current prices, the impact could be lower.
Needless to say, the remedies opened a mixed bag of reactions from the solar sector. SEIA cautiously praised the ITC for "taking a thoughtful approach to its remedies" but restated its commitment to forestall any potential tariff remedies potentially harmful to the broader solar industry.
"We look forward to collaborating with the Trump administration to arrive at such a solution and we will continue to work with our broad coalition of supporters to impress upon the administration the need for an approach that will not inflate the cost of electricity for all Americans and harm workers, consumers and the U.S. economy," SEIA President Abby Hopper said in a statement.
Sunrun board member and co-founder Ed Fenster bluntly noted the wildly varying remedy proposals "demonstrate Suniva’s request was not permissible under law."
For its part Suniva expressed disappointment with the remedy proposals, saying they fail to solve the problems facing domestic manufacturers.
"Suniva calls on President Trump to implement the remedy recommendations as submitted by Suniva and SolarWorld, reject the ITC’s weak remedy recommendation, and take the courageous steps necessary to save American manufacturing with a strong remedy that will reinvigorate this sector, and help protect U.S. energy security and economic prosperity," the company said in a statement.
By Nov. 13, the ITC will send its final recommendations to President Trump, who can follow their suggestions, impose his own set of remedies or do nothing. It's unlikely Trump will take no action, given his protectionist predilections and open disdain for solar energy, despite his conservative allies like the Heritage Foundation condemning the push for tariffs.
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