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Ultimately, energy independence in today’s world is an illusion in the age of globalization because the hyper-connectivity of the market makes it impossible. Still, it’s a never-ending battle cry that ends up being a semantic argument, the outcome of which depends on how you define “independence.”
The American shale boom briefly reignited debate over something the nation had long considered a distant dream: energy independence.
But that was before Covid-19 hit, and with it a full-fledged flight to renewable energy.
The idea that the country could become self-sufficient by producing enough energy to support all of its people and industries was first floated by Nixon when he declared war on foreign oil during the oil crisis. 1970s. But with the shift to low-carbon energy underway, America may not be any closer to achieving this energy utopia than it was four decades ago.
In fact, the energy transition could simply mean that America’s energy dependency is now shifting from OPEC’s power plant, Saudi Arabia, to the largest manufacturer of renewable energy equipment and the largest importer of Saudi oil: China.
And this is because China has become, within a decade, the leading manufacturer of equipment producing renewable energy, especially solar energy. Related: Pemex in Mexico Claims Discovery of Billions of Barrels of Oil
In fact, 7 of the top 10 solar manufacturers in the world are Chinese companies, with only First Solar Inc. (NASDAQ: FSLR) and SunPower Inc. (NASDAQ: SPWR) representing the United States.
The Biden administration has pledged to install at least 500 million solar panels nationwide and spend $ 1.7 trillion in federal spending on renewable energy infrastructure in a bid to make the United States a net zero emitter of carbon pollution by 2050.
But it is very likely that the vast majority of those investment dollars will end up in the coffers of the Middle Empire – and with it, our dreams of energy independence.
Biden Solar Wall
The solar sector became the top performing corner of the clean energy universe during the pandemic and continued to shine after Biden was declared president-elect.
Unfortunately, the current year has been anything but favorable for the solar sector, with the Invesco Solar ETF (TAN) down 6.6% vs. 5.3% gain since the start S&P 500.
The sell-off may primarily be linked to overvaluation concerns, but also growing concerns about China’s strangulation of the sector.
The irony of all of this is that China could end up expanding its dominance during Biden’s tenure.
In January 2018, the Trump administration implemented Section 201 solar tariffs on imported cells and modules at the height of the trade war with China. A presidential proclamation issued in October aims to increase these tariffs and eliminate an exemption for bilateral solar panels. Related: Another Investment Bank Bets On $ 100 In Oil
Although the evidence is mixed regarding their effectiveness, the disadvantages seem to outweigh the advantages. On the one hand, the 2.5 gigawatt solar cell import cap provided some support to the domestic solar module manufacturing industry and also helped level the playing field.
But the harm caused is by no means negligible. According to The Hill, the 2018 solar tariffs significantly hurt America’s solar industry, destroying more than 62,000 jobs and nearly $ 19 billion in new private sector investment. Tariffs, which started at 30% in 2018, have made some imported panels more expensive, with the price of high-efficiency Passivated Emitter Rear Cell (PERC) modules nearly doubling in the United States compared to prices in other markets. as modules leave factories. in China and Southeast Asia. Indeed, Greentech Media estimates that when purchased in multi-megawatt quantities, these modules now cost between 32 and 35 cents per watt in the United States, compared to only 17 to 19 cents per watt when manufactured. The lion’s share of these additional costs can be directly attributed to Trump’s tariffs, as shipping costs are much lower by 1.5 to 2 cents per watt.
The fact that the U.S. solar industry has continued to thrive despite – and not because of – tariffs is a real testament to the strength of solar dynamics. Indeed, module imports from China have been on a growth path since January 2019, despite a combination of tariffs, countervailing duties and anti-dumping laws under Section 201. It is expected that this will happen. that Biden order the International Trade Commission to assess those tariffs and possibly repeal them given the damage they have done to the downstream solar industry in that country. Even the partial elimination of these punitive tariffs on solar modules and inverters should have positive effects on solar development.
But when it comes to boosting U.S. production of parts and solar modules, the administration faces an uphill battle.
Most critics claim that Trump’s protectionist trade policies, such as tariffs, have backfired, serving only to hamper home solar deployment and increase costs while doing nothing to stop China.
According to Jeff Ferry, chief economist for the Coalition for a Prosperous America (CPA) in Washington:
“Our evidence points to China’s strangulation on solar manufacturing. China seeks to dominate this industry globally because it recognizes the importance of renewable energy and if it manages to dominate solar power, it will give it a huge advantage to gain the support and loyalty of many In the game of global geopolitics, control of energy supply is a vital weapon and advantage. In a hyper-competitive business world, being number one in power generation is much more important than being number one on the stock listings or basketball shoes.“
Almost 80% of solar panels installed in the United States come from Chinese companies. China currently controls 64% of polysilicon materials in the world compared to 10% market share in the United States as well as nearly 100% of solar ingots and solar wafers.
The APC says the United States must implement a mix of tax credits, incentives and favorable public procurement policies for solar installations on government properties to secure the long-term future of ‘an end-to-end American solar supply chain. Otherwise, we can say goodbye to our dreams of energy independence.
By Alex Kimani for Oil Octobers
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