With supply chain challenges flowing from the COVID pandemic continuing and inflation being exacerbated by the ongoing Russian war in Ukraine, the Biden Administration has been focused on finding ways to reduce inflation while at the same time trying to move the U.S. towards greater reductions in greenhouse gases as part of the U.S. commitments under the Paris Agreement.
The U.S. has seen large increases in installaed renewable energy in recent years, although there has been strong pushback from solar installers to efforts by domestic producers to address possible circumvention of existing trade remedy measures. See, e.g., PV Tech, Nearly all US solar companies expecting ‘severe or devastating impact’ of anti-circumvention investigation, April 6, 2022, https://www.pv-tech.org/nearly-all-us-solar-companies-expecting-severe-or-devastating-impact-of-anti-circumvention-investigation/. There has been some Congressional support for not pursuing the anticircumvention investigations, although such investigations are supposed to be fact based versus politically driven or opposed. See, e.g., PV Magazine, House of Representatives joins growing opposition to solar anti-circumvention investigation, May 15, 2022, https://pv-magazine-usa.com/2022/05/19/house-of-representatives-joins-growing-opposition-to-solar-anti-circumvention-investigation/.
On June 6, 2022, President Biden issued five Memoranda on Presidential Determinations Pursuant to Section 303 of the Defense Production Act of 1950, as amended, addressing (1) Electrolyzers, Fuel Cells, and Platinum Group Metals, (2) Insulation, (3) Electric Heat Pumps, (4) Solar Photovoltaic Modules and Module Components, and (5) Transformers and Electric Power Grid Components. The President also issued a Declaration of Emergency and Authorization for Temporary Extensions of Time and Duty-Free Importation of Solar Cells and Modules from Southeast Asia. All documents are due to be published in the Federal Register on June 9, 2022.
The Memoranda are similar in language. The one on solar photovoltaic modules and module components is copied below.
“Memorandum on Presidential Determination Pursuant to Section 303 of the Defense Production Act of 1950, as amended, on Solar Photovoltaic Modules and Module Components
“JUNE 06, 2022
“MEMORANDUM FOR THE SECRETARY OF ENERGY
“SUBJECT: Presidential Determination Pursuant to Section 303 of the Defense Production Act of 1950, as amended, on Solar Photovoltaic Modules and Module Components
“Ensuring a robust, resilient, and sustainable domestic industrial base to meet the requirements of the clean energy economy is essential to our national security, a resilient energy sector, and the preservation of domestic critical infrastructure. Therefore, by the authority vested in me as President by the Constitution and the laws of the United States of America, including section 303 of the Defense Production Act of 1950, as amended (the “Act”) (50U.S.C. 4533), I hereby determine, pursuant to section 303(a)(5) of the Act, that:
“(1) solar photovoltaic modules and module components, including ingots, wafers, solar glass, and cells, are industrial resources, materials, or critical technology items essential to the national defense;
“(2) without Presidential action under section 303 of the Act, United States industry cannot reasonably be expected to provide the capability for the needed industrial resource, material, or critical technology item in a timely manner; and
“(3) purchases, purchase commitments, or other action pursuant to section 303 of the Act are the most cost effective, expedient, and practical alternative method for meeting the need.
“Pursuant to section 303(a)(7)(B) of the Act, I find that action to expand the domestic production capability for solar photovoltaic modules and module components is necessary to avert an industrial resource or critical technology item shortfall that would severely impair national defense capability.
“Therefore, I waive the requirements of section 303(a)(1)–(a)(6) of the Act for the purpose of expanding the domestic production capability for solar photovoltaic modules and module components.
“You are authorized and directed to publish this determination in the Federal Register.
“JOSEPH R. BIDEN JR”
Only the solar modules and components memo was accompanied by a waiver on import duties on certain products from selected countries not currently subject to trade remedies. The emergency/waiver decision is copied below.
“Declaration of Emergency and Authorization for Temporary Extensions of Time and Duty-Free Importation of Solar Cells and Modules from Southeast Asia
“JUNE 06, 2022
“Electricity is an essential part of modern life that powers homes, business, and industry. It is critical to the function of major sectors of the economy, including hospitals, schools, public transportation systems, and the defense industrial base. Even isolated interruptions in electric service can have catastrophic health and economic consequences. A robust and reliable electric power system is therefore not only a basic human necessity, but is also critical to national security and national defense.
“Multiple factors are threatening the ability of the United States to provide sufficient electricity generation to serve expected customer demand. These factors include disruptions to energy markets caused by Russia’s invasion of Ukraine and extreme weather events exacerbated by climate change. For example, in parts of the country, drought conditions coupled with heatwaves are simultaneously causing projected electricity supply shortfalls and record electricity demand. As a result, the Federal Energy Regulatory Commission and the North American Electric Reliability Corporation have both warned of near-term electricity reliability concerns in their recent summer reliability assessments.
“In order to ensure electric resource adequacy, utilities and grid operators must engage in advance planning to build new capacity now to serve expected customer demand. Solar energy is among the fastest growing sources of new electric generation in the United States. Utilities and grid operators are increasingly relying on new solar installations to ensure that there are sufficient resources on the grid to maintain reliable service. Additions of solar capacity and batteries were expected to account for over half of new electric sector capacity in 2022 and 2023. The unavailability of solar cells and modules jeopardizes those planned additions, which in turn threatens the availability of sufficient electricity generation capacity to serve expected customer demand. Electricity produced through solar energy is also critical to reducing our dependence on electricity produced by the burning of fossil fuels, which drives climate change. The Department of Defense has recognized climate change as a threat to our national security.
In recent years, the vast majority of solar modules installed in the United States were imported, with those
from Southeast Asia making up approximately three-quarters of imported modules in 2020. Recently, however, the United States has been unable to import solar modules in sufficient quantities to ensure solar capacity additions necessary to achieve our climate and clean energy goals, ensure electricity grid resource adequacy, and help combat rising energy prices. This acute shortage of solar modules and module components has abruptly put at risk near-term solar capacity additions that could otherwise have the potential to help ensure the sufficiency of electricity generation to meet customer demand. Roughly half of the domestic deployment of solar modules that had been anticipated over the next year is currently in jeopardy as a result of insufficient supply. Across the country, solar projects are being postponed or canceled.
“The Federal Government is working with the private sector to promote the expansion of domestic solar manufacturing capacity, including our capacity to manufacture modules and other inputs in the solar supply chain, but building that capacity will take time. Immediate action is needed to ensure in the interim that the United States has access to a sufficient supply of solar modules to assist in meeting our electricity generation needs.
“NOW, THEREFORE, I, JOSEPH R. BIDEN JR., President of the United States, by the authority vested in me by the Constitution and the laws of the United States of America, including by section 318(a) of the Tariff Act of 1930, as amended, 19 U.S.C. 1318(a), do hereby declare an emergency to exist with respect to the threats to the availability of sufficient electricity generation capacity to meet expected customer demand. Pursuant to this declaration, I hereby direct as follows:
“Section 1. Emergency Authority.
“(a) To provide additional authority to the Secretary of Commerce(Secretary) to respond to the emergency herein declared, the authority under section 1318(a) of title 19, United States Code, is invoked and made available, according to its terms, to the Secretary.
“(b) To provide relief from the emergency, the Secretary shall consider taking appropriate action under section1318(a) of title 19, United States Code, to permit, until 24 months after the date of this proclamation or until the emergency declared herein has terminated, whichever occurs first, under such regulations and under such conditions as the Secretary may prescribe, the importation, free of the collection of duties and estimated duties, if applicable, under sections 1671, 1673, 1675, and 1677j of title19, United States Code, of certain solar cells and modules, exported from the Kingdom of Cambodia, Malaysia, the Kingdom of Thailand, and the Socialist Republic of Vietnam, and that are not already subject to an antidumping or countervailing duty order as of the date of this proclamation, and to temporarily extend during the course of the emergency the time therein prescribed for the performance of any act related to such imports.
“(c) The Secretary shall consult with the Secretary of the Treasury and the Secretary of Homeland Security, or their designees, before exercising, as invoked and made available under this proclamation, any of the authorities set forth in section 1318(a) of title 19, United States Code.
“Sec. 2. General Provisions.
“(a) Nothing in this proclamation shall be construed to impair or otherwise affect:
“(i) the authority granted by law to an executive department or agency, or the head thereof; or
“(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.
“(b) This proclamation shall be implemented consistent with applicable law and subject to the availability of appropriations.
“(c) This proclamation is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.
“IN WITNESS WHEREOF, I have hereunto set my hand this sixth day of June, in the year of our Lord two thousand twenty-two, and of the Independence of the United States of America the two hundred and forty-sixth.
“JOSEPH R. BIDEN JR.”
The action of President Biden basically puts on hold for two years the anticircumvention investigation (or at least any findings from such an investigation if pursued). Normally, such action would be viewed by this author as unacceptable, essentially interfering with statutory rights to have trade remedies enforced and circumvention addressed. And there may be some who question the legality of the emergency action as issued.
However, the President’s coupling the action with use of the Defense Production Act and government procurement steps creates a potential win-win, where domestic producers and their workers get expanded production opportunities at costs not reflecting dumped or subsidies inputs while solar assemblers and their workers get access to cheap solar modules while production capacity is expanding. it is also the case, that the emergency action does not disturb existing coverage of the orders, just gives a two year window when anticircumvention duties will not be applied if found due on a number of Southeast Asian countries..
The White House Fact Sheet on the above actions provides a more detailed explanation of what the Administration’s actions are intended to achieve. See White House Briefing Room, FACT SHEET: President
Biden Takes Bold Executive Action to Spur Domestic Clean Energy Manufacturing, JUNE 06, 2022, https://www.whitehouse.gov/briefing-room/statements-releases/2022/06/06/fact-sheet-president-biden-takes-bold-executive-action-to-spur-domestic-clean-energy-manufacturing/. The Fact Sheet is copied below.
“FACT SHEET: President Biden Takes Bold Executive Action to Spur Domestic Clean Energy Manufacturing
“JUNE 06, 2022
“Historic Actions Include Authorizing Defense Production Act to Lower Energy Costs, Strengthen Power Grid, and Create Good-Paying Jobs
“Today’s clean energy technologies are a critical part of the arsenal we must harness to lower energy costs for families, reduce risks to our power grid, and tackle the urgent crisis of a changing climate. From day one, President Biden has mobilized investment in these critical technologies. Thanks to his clean energy and climate agenda, last year marked the largest deployment of solar, wind, and batteries in United States history, and our nation is now a magnet for investment in clean energy manufacturing.
“Since President Biden took office, the private sector has committed over $100 billion in new private capital to make electric vehicles and batteries in the United States. We have made historic investments in clean hydrogen, nuclear, and other cutting-edge technologies. And companies are investing billions more to grow a new domestic offshore wind industry.
“We are also now on track to triple domestic solar manufacturing capacity by 2024. The expansions to domestic solar manufacturing capacity announced since President Biden took office will grow the current base capacity of 7.5 gigawatts by an additional 15 gigawatts. This would total 22.5 gigawatts by the end of his first term – enough to enable more than 3.3 million homes to switch to clean solar energy each year.
“While President Biden continues pushing Congress to pass clean energy investments and tax cuts, he is taking bold action to rapidly build on this progress and create a bridge to this American-made clean energy future. Today, President Biden is taking action to:
“o Authorize use of the Defense Production Act (DPA) to accelerate domestic production of clean energy technologies, including solar panel parts;
“o Put the full power of federal procurement to work spurring additional domestic solar manufacturing capacity by directing the development of master supply agreements, including “super preference” status; and
“o Create a 24-month bridge as domestic manufacturing rapidly scales up to ensure the reliable supply of components that U.S. solar deployers need to construct clean energy projects and an electric grid for the 21st century, while reinforcing the integrity of our trade laws and processes.
“Together, these actions will spur domestic manufacturing, construction projects, and good-paying jobs – all while cutting energy costs for families, strengthening our grid, and tackling climate change and environmental injustice. With a stronger clean energy arsenal, the United States can be an even stronger partner to our allies, especially in the face of Putin’s war in Ukraine.
“The stakes could not be higher. That is why President Biden also continues to urge Congress to quickly pass tax cuts and additional investments that advance U.S. clean energy manufacturing and deployment. Failing to take these actions would deny consumers access to cost-cutting clean energy options, add risks to our power grid, and stall domestic clean energy construction projects that are critical to tackling the climate crisis. At the same time, President Biden will keep using his executive authority to take bold action to build an American-made clean energy future.
“INVOKING THE DEFENSE PRODUCTION ACT FOR CLEAN ENERGY
“Today, President Biden is authorizing the use of the Defense Production Act (DPA) to accelerate domestic production of clean energy technologies – unlocking new powers to meet this moment. Specifically, the President is authorizing the Department of Energy to use the DPA to rapidly expand American manufacturing of five critical clean energy technologies:
“o Solar panel parts like photovoltaic modules and module components;
“o Building insulation;
“o Heat pumps, which heat and cool buildings super efficiently;
“o Equipment for making and using clean electricity-generated fuels, including electrolyzers, fuel cells, and related platinum group metals; and
“o Critical power grid infrastructure like transformers.
“In deploying the DPA, the Biden-Harris Administration will strongly encourage the use of strong labor standards, including project labor agreements and community benefits agreements that offer wages at or above the prevailing rate and include local hire provisions. The Administration also will strongly encourage projects with environmental justice outcomes that empower the clean energy transition in low-income communities historically overburdened by legacy pollution.
“Following this announcement, the White House and the Department of Energy will convene relevant industry, labor, environmental justice, and other key stakeholders as we maximize the impact of the DPA tools made available by President Biden’s actions and strengthen domestic clean energy manufacturing.
“BOOSTING MADE-IN-AMERICA CLEAN ENERGY WITH FEDERAL PROCUREMENT
“President Biden is also putting the full power of federal procurement to work spurring additional domestic solar manufacturing capacity. Today, the President directed the development of two innovative tools to accelerate Made-in-America clean energy:
“o Master Supply Agreements for domestically manufactured solar systems to increase the speed and efficiency with which domestic clean electricity providers can sell their products to the U.S. Government; and
“o So-called “Super Preferences” to apply domestic content standards for federal procurement of solar systems, including domestically manufactured solar photovoltaic components, consistent with the Buy American Act.
“These federal procurement measures can stimulate demand for up to a gigawatt of domestically produced solar modules in the near term, and up to 10 gigawatts over the next decade from U.S. government demand alone. To further increase the impact of these actions, the Administration will also partner with state and local governments and municipal utilities in these innovative arrangements – increasing the potential market impact over the next decade to as much as over 100 gigawatts. These procurement actions will provide a significant demand anchor for a revitalized domestic solar manufacturing industry.
“SUPPORT FOR U.S. GRID-STRENGTHENING, CLEAN ENERGY CONSTRUCTION PROJECTS
“Because of private investor confidence in President Biden’s leadership and our national commitment to a clean energy future, the United States is now on track to triple its solar manufacturing capacity by 2024. The expansions to domestic solar manufacturing capacity announced since the President took office will grow the current 7.5 gigawatts of capacity by an additional 15 gigawatts of capacity, for a total of 22.5 gigawatts by the end of his first term – enough to enable more than 3.3 million homes to switch to clean solar energy every year. To rapidly build on this progress and create a bridge to this American-made clean energy future, we need to boost short-term solar panel supply to support construction projects in the United States right now. This is because grid operators around the country are relying on planned solar projects to come online to ensure there is sufficient power to meet demand, and to ensure we can continue to deploy solar at the rates needed to keep us on track to meet the President’s climate goals.
“Today, President Biden is using his powers to create a 24-month bridge for certain solar imports while reinforcing the integrity of our trade laws and processes. Specifically, the President is:
“o Temporarily facilitating U.S. solar deployers’ ability to source solar modules and cells from Cambodia, Malaysia, Thailand, and Vietnam by providing that those components can be imported free of certain duties for 24 months in order to ensure the U.S. has access to a sufficient supply of solar modules to meet electricity generation needs while domestic manufacturing scales up; and
“o Reinforcing his commitment to safeguarding the integrity and independence of all ongoing trade investigations by career officials at the Department of Commerce and recognizing the vital role these processes play in strengthening our economy.
“ADDITIONAL STEPS TO CUT COSTS, SUPPORT GOOD-PAYING JOBS, AND ADVANCE ENVIRONMENTAL JUSTICE
“Today’s actions build on this Administration’s existing initiatives to grow domestic clean energy innovation and manufacturing and to lower energy costs for Americans, including:
“o Permitting More Clean Energy on Public Lands. As part of the Biden-Harris Permitting Action Plan, a new five-agency collaboration is expediting reviews of clean energy projects on public lands through the Department of the Interior, helping us race ahead toward permitting at least 25 gigawatts by 2025 – enough to power around five million homes. These actions have already increased clean energy permitting activities by 35 percent, including major solar project approvals and leases. We have also launched five new Renewable Energy Coordination Offices and reduced rents and fees by more than 50 percent for solar and wind projects on public lands.
“o Boosting Community-Based Clean Energy in Cities and Rural Areas. The Biden-Harris Administration is helping 17 local communities remove red tape with the SolarAPP+ online tool to enable same-day approvals for residential solar installation permits, and an additional 400 interested communities are in the pipeline. The National Climate Task Force launched new initiatives on increasing deployment of Distributed Energy Resources, including rooftop solar, with a focus on bringing the benefits of these projects to underserved communities. The United States Department of Agriculture provided the largest-ever investment in rural renewable energy last year. In addition, the Department of Energy and the Department of Health and Human Services are partnering to develop and pilot a digital platform that will connect customers who are eligible for the Low Income Home Energy Assistance Program with community solar subscriptions, to further reduce customer energy costs. Likewise, the U.S. Department of Housing and Urban Development is working with municipalities to enable residents of affordable housing to directly benefit from low-cost community solar power without seeing a rent increase or adjustment to their utility allowance.
“o Supporting a Diverse Solar Workforce with Good-Paying Jobs, including pathways to stable careers with the free and fair choice to join a union. Solar industry jobs consistently rank among the top fastest-growing in the nation, and many require only a high school education or GED. The Economic Development Administration recently awarded funding to support solar employment training in tribal and coal-impacted communities. In addition, the Department of Energy has issued a Request for Information and hosted six workshops to determine common goals and needs from stakeholders, including industry, unions, and training organizations. DOE will continue to explore these issues, including by providing funding, new collaborations with industry, other federal agencies, and state-based job boards to develop equitable worker-centric training and education programs, work-based learning opportunities, and support services such as career counseling, mentorship, and job readiness programs.
“o Developing Clean Energy Domestic Manufacturing for Export and Building Capacity in Allied Nations. The Export-Import Bank of the United States (EXIM) Make More in America Initiative, approved by the EXIM board in April, will prioritize investments to expand clean energy manufacturing. The U.S. International Development Finance Corporation supports building resilient clean energy manufacturing supply chains in allied nations around the world, reducing global dependence on China.
“o Investing in Clean Energy for Resilience in Puerto Rico: The Biden-Harris Administration joined forces with the Commonwealth of Puerto Rico to advance dozens of solar energy projects that will enable Puerto Rico to meet its target of 100% renewable electricity, while improving power sector resilience and increasing access to more affordable energy and cleaner air.”
A few thoughts
In a year marked by an extraodinary set of challenges, the Biden Administration is fighting to move forward a clean energy agenda, combat the supercharged inflation of recent months, address the challenges to the global order from the Russian invasion of Ukraine and more. The Administration is committed to rapidly expanding renewable energy resources in the U.S. It is also committed to strong enforcement of trade remedy laws and expanding domestic manufacturing and manufacturing jobs.
The current anticircumvention investigations on a number of Southeast Asian countries on solar modules and components and the strong pressure from solar assemblers/installers created a challenging political environment for the Biden team. The solution picked — combining expanded domestic production, government procurement support and a temporary waiver of any additional duties on selected countries not yet subject to trade remedies on solar modules or components — is a creative whole of government approach to expand renewable energy installations while expanding domestic production and increasing manufacturing jobs in the United States. Let’s hope the approach proves successful in fact.
The statute that President Biden invoked for the temporary suspension of the anticircumvention investigations (19 USC 1318(a)), authorizes the President to authorize the Secretary (of the Treasury, not Commerce, but maybe this doesn’t matter) to allow “the importation free of duty of food, clothing, and medical, surgical, and other supplies for use in emergency relief work.” It seems to me to be a considerable stretch to say that solar cells and modules are “supplies for use in emergency relief work.”
Patrick – thanks for your comment. There have been some articles raising questions about whether the waiver is legal. A comment I received yesterday also raised the question about whether the Administration has the resources to in fact expand domestic production significantly and fund acquisitions. See Bloomberg, Solar-Panel Makers Scorn ‘Pittance’ of Aid in Biden Relief Plan, June 7, 2022, https://www.bloomberg.com/news/articles/2022-06-07/solar-panel-makers-scorn-pittance-of-aid-in-biden-relief-plan?sref=vdNmoUVL.
Any legal challenge would not be brought by the import community but by domestic producers or their workers who are dissatisfied with the total package announced on the 6th of June and/or who prefer the anticircumvention cases to proceed. Presumably any challenge will be filed with the U.S. Court of International Trade.