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The Biden administration is serious about investigating any
claims that imports of critically needed materials, especially from
China, are short-changing domestic manufacturers of clean energy
technologies, as two recent actions show.
The Department of Commerce asked the American Solar
Manufacturers Against Chinese Circumvention (A-SMACC) on 29
September to back up allegations of unfair import practices in a 16
August petition with more
information. The group, which comprises anonymous US solar
developers, alleged imports of solar cells and modules from
Malaysia, Thailand, and Vietnam were "unlawfully circumventing
antidumping and countervailing duties on China."
And earlier this week, Commerce published a Federal Register notice
announcing the start of an investigation into imports of rare earth
permanent magnets used in wind turbines, electric vehicles (EVs),
as well as fighter jet and missile guidance systems.
Wind turbines and solar panels are seen as essential to
President Joe Biden's goal to decarbonize the US power sector, as
are the rare earth minerals that go into some turbine motors and
EVs.
Ever since he took office in January, Biden has made no secret
of his ambition to compete with China in the clean energy
technology race, while expressing concern about sourcing materials
from China and countries with suspect labor practices.
"As I've said before, we're in competition with China and many
other nations for the 21st century. To win, we're going to have to
make sure the future will be made in America," Biden said 5 August,
announcing a national 50% EV goal for new car sales for 2030.
According to IHS Markit analysts, the investigation won't affect
the wind turbine markets in the next 12 months, and it is too early
to speculate about its impact on the EV market.
As far as the US solar market is concerned, another IHS Markit
analyst said the impact, if there was any at all, would be felt in
2022, but that too would depend on a variety of policy
developments, not just on the outcome of the A-SMACC petition.
Commerce seeks more information
The US currently has 108.7 GW of installed solar capacity,
according to the Solar Energy Industries Association (SEIA), a US
trade association, which had its members exhort Commerce to reject
the 16 August petition.
In its petition, A-SMACC alleged that more than a dozen
companies based in Malaysia, Thailand, and Vietnam are illegally
and unfairly importing Chinese solar products, and thereby
circumventing 2012 antidumping duty (AD) and countervailing duty
(CVD) orders on solar cells and modules from China.
Commerce had until 29 September to decide whether to accept the
A-SMACC petition and investigate its claims, or to delay its
investigation pending more information about the US companies that
are allegedly being harmed by the solar cell and module
imports.
The agency chose the latter.
"We have examined your submissions and have determined that we
require additional information to address certain threshold issues
before we can consider the merits of your requests for
anti-circumvention rulings," Abdelali Elouaradia, director of
Commerce's Office IV AD/CVD Operations, wrote to Wiley Rein attorney
Timothy Brightbill, who is representing A-SMACC.
"Meritless" petition
Elouaradia gave the group until 6 October to respond, adding it
would take the agency another 45 days to determine whether to
initiate an investigation, during which it may seek further
information.
For now, Commerce has asked for the names of the companies,
which the petition said would be harmed by the imports, and
concealed their identities due to fear of retaliation from China.
To investigate claims of "substantial harm," the government agency
also asked Brightbill to reveal whether A-SMACC companies have any
foreign ownership as well as any sales or production offices in the
three Southeast Asian countries in question.
SEIA CEO Abigail Ross as well as American Clean Power
Association CEO Heather Zichal have deemed the A-SMACC petition to
be meritless.
"Moving ahead with this matter would cause grave damage to the
solar sector in the United States and put the Biden
administration's economic and climate goals at risk," Zichal warned
in a 29 September statement.
Ross, in her own 29 September statement, noted that "the detail
and nature of the questions Commerce asked the anonymous
petitioners clearly indicates that the petitioners have produced a
filing largely devoid of the information the department needs to
assess whether to initiate this case."
On 22 September, more than 200 solar companies wrote to Secretary of Commerce
Gina Raimondo urging her to drop the petition, saying it "would
harm the US solar industry and the nation's climate goals."
Brightbill did not respond to a Net-Zero Business Daily request
for comment on the Commerce letter. In a 28 September press release
though, Brightbill, who is a partner with Wiley's international
trade practice, said nearly all the raw materials, R&D, and
capital investment at the dozen or so companies his clients seek
action against is still coming from China. "These factories exist
only to serve the US market and to avoid AD/CVD duties. This is the
very definition of circumvention," he added.
The circumvention ruling that Brightbill's clients have
requested covers only "certain Chinese-owned companies" in
Malaysia, Thailand, and Vietnam, he pointed out. "There is plenty
of fairly traded, non-Chinese available capacity to meet US solar
demand from non-subject companies in those countries and in the
rest of the world, in addition to new and increasing capacity from
US producers," he said.
Minimal disruption to construction
timelines
US solar capacity installations between 2021 and 2025 are set to
total 149 GW, according to IHS Markit data.
Despite challenges in the global supply chain, many US
developers have experienced minimal disruption to construction
timelines in 2021, an analysis of IHS Markit data from the end of
August shows. Developers have already installed about 12 GWdc of
utility-scale solar PV and procured the equipment they need for
more than 8.9 GWdc of projects under construction, with 5.3 GWdc
already approved, IHS Markit Executive Director Clean Tech and
Renewables Edurne Zoco told Net-Zero Business Daily 1 October.
"We do not forecast any of the current policy developments to
have impact on 2021 installations, but they could impact 2022
[solar module availability and prices] depending on the final
outcome of all these actions," Zoco said.
In addition to the A-SMACC petition, she pointed to the US
Customs and Border Protection's Withhold Release Order that
requires companies to furnish a certificate of origin for their
products and the four-year tariff program President Donald Trump imposed via a proclamation in
January 2018 on imported solar modules and cells that phases down
from 30% to 15% in its final year. The tariff came on the heels of
a case brought before the US International Trade Commission by two
US solar manufacturers, Suniva and SolarWorld.
Rare earth magnet imports under scrutiny
While Commerce waits for Brightbill to furnish additional
information, it has launched an investigation on its own into
imports of rare earth permanent magnets used for defense purposes,
wind turbines, and EVs.
Biden has been clear about shoring up domestic production of
critical minerals and identifying gaps in supply chains that would
hinder the US from achieving its clean energy goals, notably a
net-zero carbon power generation sector by 2035.
The rare earth element used in these neodymium-iron-boron
(NdFeB) magnets is neodymium.
According to a White House report, China has
all the essential rare earth supply chain tiers from mining and
crushing to processing and manufacturing.
An International Energy Agency May
report on critical minerals reveals that China was responsible
for more than 60% of global production of rare earth elements and
for nearly 90% of refining capacity in 2019.
US wind industry largely unaffected by
investigation
IHS Markit Senior Analyst Indrayuth Mukherjee told Net-Zero
Business Daily that the onshore wind sector remains less
susceptible to swings in rare earth magnet prices, with the four
dominant vendors in the US—GE, Vestas, Siemens Gamesa, and
Nordex—predominantly supplying geared turbines that have a
limited use of these magnets.
"However," Mukherjee added, "the offshore sector remains more
vulnerable to any potential swings in prices due to this new
development."
For instance, IHS Markit data tracking global wind turbine
orders as of 25 August found that both GE and Siemens
Gamesa—who have secured nearly all the offshore orders in the
US market in the last 12 months—offer direct drive turbines
that do use rare earth-based permanent magnets.
The American Clean Power Association told Net-Business Zero
Daily 30 September that it was still evaluating the investigation
notice and would most certainly be commenting by the 12 November
deadline.
Meanwhile, Raimondo, announcing the investigation on 24
September, said the agency remains committed to securing supply
chains to protect national security, economic security, and
technological leadership. If Raimondo finds, on the basis of the
investigation, that imports of rare earth magnets are in quantities
that affect or impair national security, she will recommend action
to the president accordingly. The report is due by 27 June 2022,
after which Biden has 90 days to decide on a course of action that
include tariffs.
Posted 01 October 2021 by Amena Saiyid, Senior Climate and Energy Research Analyst
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