Finally, energy independence in today’s world is an illusion in the age of globalization, because the hyperconnection of the market makes it impossible. However, it is an endless battle cry that becomes an argument of semantics, the result of which depends on how you define “independence”.
America’s shale boom briefly rekindled the debate about something the nation had long considered a distant dream: energy independence.
But that was before Covid-19 hit and, with it, a complete flight to renewable energy.
The notion that the country could become self-sufficient by producing enough energy to support the entire population and industries was first launched by Nixon when it declared war on foreign oil during the oil crisis of the 1970s. But with the shift to low-carbon energy , America may not be closer to realizing this energy utopia than it was four decades ago.
In fact, the energy transition could simply mean that America’s energy dependence is now shifting from OPEC, Saudi Arabia, to the largest producer of renewable energy equipment and the largest importer of Saudi oil: China.
And that’s because China has become, over a decade, the most dominant producer of equipment that produces renewable energy, especially solar energy. About: Pemex in Mexico is proud of the discovery of billions of barrels of oil
In fact, 7 of the top 10 solar producers globally 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 have at least 500 million solar panels installed nationwide and to spend $ 1.7 trillion in federal spending on renewable energy infrastructure in an attempt to make the United States a net zero emitter of carbon pollution by 2050.
But it is very likely that the vast majority of these investment dollars will reach the box of the Middle Kingdom – and with it, our dreams of energy independence.
Biden’s solar wall
The solar sector became the best performing corner of the clean energy universe during the pandemic and continued to shine after Biden was elected president.
Unfortunately, this year has been anything but good for the solar sector along with Invesco Solar ETF (TAN) decreased by 6.6% compared to 5.3% YTD gain with S&P 500.
The sale may be largely linked to overvaluation concerns, but also to growing concerns about China’s obstacle in this sector.
The irony is that China could eventually expand its rule during Biden’s tenure.
In January 2018, the Trump administration implemented section 201 solar tariffs for imported cells and modules at the height of the trade war with China. A presidential proclamation launched in October aims to increase these tariffs and eliminate an exemption for double-sided solar panels. Related to this: Another investment bank relies on USD 100 for oil
Although the evidence is mixed in terms of their effectiveness, the cons seem to outweigh the advantages. On the one hand, the 2.5 gigawatt solar cell import cap provided some support for the domestic solar module production industry and also helped to level the playing field.
But the harm done is not negligible at all. According to The Hill, 2018 solar tariffs have significantly affected the US solar sector, 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 almost doubling in the United States compared to prices in other markets as the modules leave factories. in China and Southeast Asia. Indeed, Greentech Media estimates that when purchased in quantities of several megawatts, such modules now cost between 32 and 35 cents per watt in the US, compared to only 17 to 19 cents per watt when manufactured. Most of these additional costs can be calculated directly from Trump’s tariffs, as shipping costs amount to 1.5 cents to 2 cents per watt.
The fact that the US solar sector has continued to thrive despite – not because of – tariffs is a testament to how strong the solar momentum has grown. Indeed, imports of modules from China have been on the rise since January 2019. This is despite a combination of tariffs in section 201, countervailing duties and anti-dumping laws. Biden is expected to order the Committee on International Trade to assess these tariffs and possibly repeal them in view of the damage they have caused to the downstream solar industry in that country. Even the partial elimination of these punitive tariffs on solar modules and inverters is expected to have positive effects on solar development.
But when it comes to increasing U.S. production of solar parts and modules, the administration is facing an upward battle.
Most critics say Trump’s protectionist trade policies, such as tariffs, have collapsed, only to hinder domestic solar deployment and increase costs without doing anything to stop China.
According to Jeff Ferry, chief economist of the Coalition for a Prosperous America (CPA) in Washington:
“Our evidence documents China’s importance in solar energy production. China seeks global dominance of this industry because they recognize the importance of renewable energy, and if they achieve dominance in solar energy, this will give them a huge advantage in gaining support and loyalty from many in other countries around the world. In the game of global geopolitics, control of energy supply is a weapon and a vital advantage. In a hypercompetitive business world, being number one in energy production is far more important than being number one on stock exchanges. or basketball shoes.“
Almost 80% of solar panels installed in the United States come from Chinese companies. China currently controls 64% of its polysilicon material worldwide compared to 10% of the US market share, as well as almost 100% of solar ingots and solar wafers.
The CPA says the US needs to implement a mix of tax credits, incentives and favorable public procurement policies for government-owned solar installations to ensure the long-term future of a US solar power supply chain. Otherwise, we can say goodbye to our energy independence.
By Alex Kimani for Oilprice.com
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