Biden's Confused Trade Policy Threatens American Energy Security

Joe Biden spent much of the 2020 presidential campaign talking about his plans to combat “climate change” in order to save the planet and its environment. But his grand plans to usher in cleaner burning and “green” energy have morphed into a much different reality since taking office. 

Take for example his recent ban on new oil and gas leases on federal land. An abundance of natural gas in the United States has led to a rise in electricity generated by the fuel, which in concert with renewables has helped lead to a 33% reduction in carbon emissions in the power sector over the last 15 years. Not only that, but natural gas fired power plants also serve as a crucial backstop to ensure reliability on the grid for intermittent sources of renewable energy. Cutting off this important supply of energy will threaten to undermine much of the progress that has been made to date in generating cleaner electricity.

Similarly, a recent Withhold Release Order (WRO) issued by the Biden administration to halt the importation of a key solar panel component has created unintended but serious consequences for the U.S. solar industry. 

Allegations have surfaced that certain silicon metals contained in solar panels bound for the United States may have been created using forced labor by Hoshine, a company based in Xinjiang, China. This has triggered Customs and Border Protection (CBP) to start a WRO investigation and has swept up almost all solar panels that contain Chinese components. 

The process of creating solar panels is complex and includes a lot of different pieces from a lot of different companies and locations. In this case the raw material in question is deep in the supply chain and CBP and the Biden administration are blocking most solar panels containing Chinese components out of an overabundance of caution, as no proof exists that the panels contain the Hoshine-specific materials. 

Philip Shen, an analyst at Roth Capital Partners notes, “the stark reality is almost any module coming to the U.S. cannot yet prove it does not have Hoshine silicon metal as we believe the traceability protocols do not yet go that far up the supply chain.” He continued, “The unfortunate situation for the U.S. solar industry is that there is not a clear path to resolving this.”

The burdensome “guilty until proven innocent standard” which these WRO investigations operate under can take months to resolve and often result in storage costs that exceed the value of the products being investigated. All importers shouldn’t be punished because of one company’s alleged wrongdoings, as this will decimate the U.S. solar industry.

While these are serious allegations that should continue to be investigated, CBP is painting with too broad a brush when it comes to who is punished. In fact, this decision which creates potential negative consequences for America’s energy future was based on two papers – one unpublished and the other containing recycled claims from the unpublished paper – which lacked on-the-ground evidence and witnesses, and several times admitted there was “no conclusive evidence” to support their allegations. This is hardly the way that policy should be made and no way for America to achieve energy independence.

Ironically the solar panels that would remain on the market if this WRO is allowed to stand are much more expensive, have a history of poor product performance, and most notably have a serious toxicity problem. If the President is committed to pursue “clean” energy, shouldn’t it at least be clean? Also, the free market is already responding, with companies starting to move part of their solar supply chain out of China on their own volition. This should be encouraged by the Biden administration. 

Jinkosolar, for example, is just 6 months away from completing a brand new $500 million facility and supply chain outside of China. This move will create a completely non-China supply chain for the U.S. solar industry, as long as their doors aren’t closed due to this rash WRO. A spokesperson for the company said, “While overseas supply chains are often associated with slightly higher costs, this investment is expected to assuage concerns by developers and off-takers about the security of supply – an invaluable asset for one of the largest solar module manufacturers in the world.”

It is no doubt important to stand tough against China’s human rights abuses but instituting overly broad sanctions based on conjecture and flimsy evidence will only make America weaker abroad and further undermine our country’s energy security.  Currently, solar power is the source of 3 percent of America’s electricity but is growing rapidly and accounted for 43% of new generating capacity added in 2020. Americans want and deserve energy independence, but that will not be possible if the federal government continues to take actions such as this WRO that will undermine our sources of domestic energy.

Charles H. “Chuck” Cunningham was a Senior Advisor at the U.S. Department of Energy from 2020-21.