What the Auxin tariff ruling means for the pursuit of low-carbon solar manufacturing

Photo by Ricardo Gomez Angel on Unsplash.

Contributed by Michael Parr, Executive Director, Ultra Low-Carbon Solar Alliance

The recent final determination by the US Commerce Department in the Auxin Solar tariff case, finding that a number of Chinese solar manufacturers in Southeast Asia are circumventing previously levied anti-dumping duties and will be subject to very high duties beginning 2024, is not unexpected. This development is yet another reminder that the profound concentration of the solar supply chain amongst East Asian manufacturers will continue to present significant risks to solar buyers. We have seen wild fluctuations in the availability and cost of PV panels from Chinese producers almost from the beginning of their rapid scale-up of manufacturing as companies go through cycles of overinvestment, unprofitability, and retrenchment.

There is no doubt that the rapid development of manufacturing scale and technology advancement by Chinese PV manufacturers has had substantial benefits; it has helped to spark significant decreases in PV panel prices (some 90% decline in a decade), making solar the lowest cost and fastest growing energy source in much of the world. It has helped support a virtual explosion in solar deployment in the last 15 years. And even as these boom-bust cycles in the Chinese industry coupled with illegal trade practices have badly eroded the business prospects for western PV manufacturers it has also shown them the importance of scale and technology innovation.

However, these benefits have come at significant costs. These include exposure to a profoundly overconcentrated solar supply chain, with 75-98% of each major step in the solar supply chain controlled by Chinese companies. It is worth re-reading the IEA Special Report on the Solar Supply Chain to remind ourselves of the downsides of such overconcentration. This concentration has also resulted in significant carbon emissions, as Chinese solar manufacturing is at least twice as carbon-intensive as similar manufacturing in the West.


The Factor This! podcast broke down all angles of the Auxin Solar tariff petition in a four-part series, which included an exclusive interview with Auxin Solar CEO Mamun Rashid. Subscribe today wherever you get your podcasts.

Pt. 1: Who is Auxin Solar? An exclusive interview with the CEO behind the bitter solar tariff fight

Pt. 2: Inside the solar industry’s $5 million fight against new tariffs

Pt. 3: Rebuilding domestic solar supply chains will hinge on incentives, not tariffs, experts say

Pt. 4: How the solar industry swayed Biden on import tariffs

Update: Commerce Department issues a preliminary determination in the Auxin Solar case


We have been on the “solar coaster” for over a decade, and solar buyers have been repeatedly reminded of the challenges of this supply chain. In 2012, Chinese producers were determined to be dumping solar panels into the US market, and countervailing duties were imposed. In 2018, the US Administration applied so-called “safeguard” tariffs to a variety of PV products. Around this time the market became aware of the concentration of the most energy-intensive components of the Chinese PV industry in coal-rich regions like Xinjiang and Inner Mongolia and the resulting large carbon footprint of Chinese PV manufacturing. Then the global Covid pandemic hit and global supply chains, including solar, went sideways, and it became very difficult to source Chinese panels.

To add to the challenges a US determination that some PV products imported from China were made with forced labor led to significant and growing supply disruptions as modules with content tied to forced labor were detained by the US Customs and Border Protection under the Uyghur Forced Labor Prevention Act. The implementation of the UFLPA has also highlighted the lack of transparency in much of the Chinese solar supply chain.

Now we are seeing further potential disruptions as the US takes actions against companies circumventing the earlier anti-dumping tariffs and imposes additional tariffs. As the UFLPA limits US market entry for many Chinese producers those panels are flowing to Europe, where solar panel inventories have grown to very high levels, leading to dramatic price reductions and significant concern about potential dumping in the EU. While the EU has been much slower to take action regarding trade practices and forced labor in the solar industry, a proposal to prohibit market access for products made with forced labor is making its way through the EU’s administrative process.

Courtesy: Martin Magnemyr/Unsplash

In response to the various US policy actions, particularly the UFLPA, we have seen the Chinese government and Chinese PV associations threaten to limit exports of various PV-related materials and goods to the US, which has a whiff of Russia’s use of natural gas supply as a geopolitical tool about it. This kind of strategic risk is of increasing concern to Western governments.

All of this has intensified the ongoing supply and reputational risks associated with this supply chain, as solar buyers with their own carbon reduction goals and ESG commitments and significant deployment goals reckon with the realities of the situation.

In response to these compounding challenges, we have seen a variety of actions by solar buyers. Efforts to develop programs to provide some level of supply chain transparency have been undertaken by both US and EU associations representing solar developers, even as they work to blunt policies that would limit access to Chinese-produced solar panels. Some organizations like the Clean Energy Buyers Association have more broadly embraced sustainability goals for PV with their Principles for Purpose Driven Energy Procurement. The EU is developing both carbon footprint minimums (EcoDesign) and leadership goals (Ecolabel) for PV panels. And a global group of solar industry stakeholders, NGOs, government officials, and academics came together under the auspices of the Global Electronics Council to develop detailed and transparent carbon footprint criteria to add to the GEC’s EPEAT sustainability standard and ecolabel for solar. Major buyers like Lightsource bp and Silicon Ranch tout their use of EPEAT-registered low-carbon PV modules in their projects.

It has also led to buyers seeking more resilient and sustainable regional sources of supply. In the US some buyers are investing in domestic PV manufacturing capacity with long-term supply contracts with front-end loaded payment structures. Increasing demand coupled with policy supports like the Inflation Reduction Act are helping to fuel a resurgence of investment in US solar manufacturing. It has also led some of the larger Chinese manufacturers to begin to at least talk about low-carbon and “green” manufacturing practices. Over time the demand for sustainably manufactured low-carbon PV free of forced labor should serve as a significant motivation for more regionally dispersed PV manufacturing.  It should also lead to more Chinese PV manufacturers, many of whom are very sophisticated and technologically advanced companies, to modify their supply chains and business practices in response to these market demand trends.

Nextracker will be the sole customer of a steel production line at the new Steel Dynamics, Inc. facility in Corpus Christi, Texas. The line will be operated by JM Steel. (Courtesy: Nextracker)

To reliably support the pace of solar energy growth needed to reach global carbon reduction goals we clearly need a more diverse and resilient solar supply chain. We have a decent start but much remains to be done. Buyers should increasingly incentivize PV manufacturing in the US, EU, and other allied nations through their buying practices, such as specifying EPEAT-registered modules. Governments should implement policies like the IRA to both incentivize the use of solar products with content manufactured domestically or in allied nations and to support PV manufacturing itself. The US, EU, and other nations should pay particular attention to the challenges of investing in the most capital-intensive elements of the supply chain like polysilicon and silicon wafer production, as these are critical anchors necessary for a better supply chain to grow and are most at risk of Chinese overcapacity driven price suppression. We have a chance to get off of the solar coaster and chart a more sustainable pathway for solar. Solar buyers and governments have tools at their disposal to help chart that path.

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