Senate Democrats: Exclude Chinese Solar Panels From ITC

Two high-profile Senate Democrats introduced a proposal Tuesday that if passed would set domestic requirements on solar installations looking to qualify for the 30 percent Investment Tax Credit.

The proposed legislation from Sen. Sherrod Brown of Ohio and Sen. Charles Schumer of New York comes on the same week that the Department of Commerce is expected to make a preliminary determination on an anti-dumping tariff on panels coming into the United States from China. If illegal dumping is found, the new tariff would be added to the countervailing tariff that was already implemented to offset subsidies coming from the Chinese government. The latest ruling is expected to be announced on May 17.

Brown and Schumer’s proposal would require that 70 percent of the parts of a solar panel must be American made if the developer using that panel wishes to take the Investment Tax Credit. If the panel is shipped to be manufactured in the United States, then 50 percent of the parts would have to be American-made in order to qualify for the credit.

According to Sen. Brown’s office, the standalone legislation was just introduced today, so the wording of the bill has not yet been made public. Because of that, several key points are still unknown. It remains unclear how the 70 or 50 percent thresholds would be measured. Also, it’s uncertain whether a timetable for implementation would be set within the legislation and whether domestic requirements would be targeted only for panels coming in from China.

A vast majority of bills that are introduced never make it out of committee, and at this point it’s impossible to say what level of support it would have. But the timing clearly indicates that key Democrats are watching the U.S.-China trade case closely, and that perhaps they’re willing to eliminate the tax benefits that have helped the industry flourish in order to boost domestic production.

“We can’t trade our dependence on foreign oil for a dependence on Chinese-made solar panels,” Sen. Brown said. “We went from a solar trade surplus with China to a solar trade deficit in a matter of years. Ohio workers can compete with anyone in the world, but they deserve access to a level playing field. When the Chinese government provides direct export subsidies to its solar manufacturers, that’s not competing – it’s cheating. And it’s costing American jobs in solar manufacturing. The American tax code should not make matters worse by encouraging the purchase of Chinese-made solar panels. Our plan will ensure that American tax incentives support American solar panel manufacturers.”

“The federal government has to take China’s stranglehold on the solar power industry very seriously, and U.S. manufacturers must have every arrow in their quiver to fight back,” said Schumer. “This proposal is tough, but it’s needed to successfully counter China’s unfair trade practices. This hard-hitting plan will level the playing field for U.S. solar producers so that they can compete, create jobs and become a global leader in this rapidly-growing industry.”

While U.S. manufacturing dominated a young solar industry, China has emerged as a manufacturing leader during recent years. The country now manufactures about 60 percent of all solar panels, and it’s done so with strong government support. The U.S., meanwhile, manufactures about 6 percent of the world’s panels, though it remains vital source of many of the components that go into each panel and system.

When Ontario implemented its Feed-in tariff in 2009, a domestic manufacturing requirment was put in place prompting many companies to locate manufacturing plants in the region.

We’ll add updates once details of the U.S. legislation are announced.

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