Ultimately, energy independence in today’s world is an illusion in the age of globalization because the hyperconnection of the market makes it impossible. Still, it’s an endless rallying cry that ends up being a semantic argument, the outcome of which depends on how you define “independence”.
The shale boom in the United States briefly rekindled the debate over something the country has long considered a distant dream: energy independence.
But that was before the Covid-19 attack, 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 raised by Nixon when he declared war on foreign oil during the 1970s oil crisis. But with the change taking place for low-carbon energy, the United States may be no closer to achieving this energy utopia than it was four decades ago.
In fact, the energy transition may simply mean that America’s energy dependence now shifts from OPEC’s powerhouse, Saudi Arabia, to the largest manufacturer of renewable energy equipment and the largest importer of Saudi oil: China.
And that is because China has become, in the space of a decade, the most dominant manufacturer of equipment that produces renewable energy, especially solar energy. Related: Mexico’s Pemex boasts oil discovery of a billion barrels
In fact, 7 of the 10 largest solar energy 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 government has pledged to have at least 500 million solar panels installed across the country and to spend $ 1.7 trillion in federal spending on renewable energy infrastructure in an attempt to make the United States a zero net emitter of carbon pollution by 2050.
But it is very likely that the vast majority of these investment dollars will end up in the Middle Kingdom coffers – and with it, our dreams of energy independence.
Biden solar wall
The solar sector emerged as the best performing corner in 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 nice for the solar sector, with the Invesco Solar ETF (TAN) fell 6.6% against 5.3% YTD gain by S&P 500.
The sale can be attributed mainly to concerns about overvaluation, but also to growing concerns about China’s bottleneck in the sector.
The irony of all of this is that China may end up extending its dominance during Biden’s term.
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 released in October aims to increase these tariffs and eliminate an exemption for two-sided solar panels. Related: Another investment bank is betting on $ 100 oil
Although the evidence is contradictory as to its effectiveness, the cons seem to outweigh the pros. On the one hand, the 2.5 gigawatt solar cell import limit provided some support for the national solar module manufacturing industry and also helped level the playing field.
But the damage done is not negligible. According to The Hill, 2018 solar tariffs significantly hurt the U.S. solar sector, destroying more than 62,000 jobs and nearly $ 19 billion in new private sector investments. Tariffs, which started at 30% in 2018, made some imported panels more expensive, with the price of high-efficiency PERC (Passivated Emitter Rear Cell) modules almost doubling in the United States compared to prices in other markets as the modules leave factories in China and Southeast Asia. In fact, Greentech Media estimates that when purchased in multi-megawatt quantities, these modules now cost 32 to 35 cents per watt in the United States, compared to just 17 to 19 cents per watt when manufactured. Most of these extra costs can be directly attributed to Trump’s tariffs, since shipping costs cost much less 1.5 cents to 2 cents per watt.
The fact that the United States’ solar sector has continued to prosper despite – not because of – tariffs is a true testament to how strong the solar momentum has grown. In fact, module imports from China have been on a growth path since January 2019. This is despite a combination of Section 201 tariffs, countervailing duties and anti-dumping laws. Biden is expected to order the International Trade Commission to evaluate these tariffs and possibly revoke them, considering the damage they have done to the downstream solar industry in this country. Even the partial elimination of these punitive tariffs on solar modules and inverters must have positive effects on solar development.
But when it comes to increasing the United States’ production of solar parts and modules, the government faces an uphill battle.
Most critics say Trump’s protectionist trade policies, like tariffs, have backfired, serving only to hinder the deployment of domestic solar energy and increase costs, without doing anything to stop China.
According to Jeff Ferry, chief economist at Coalition for a Prosperous America (CPA) in Washington:
“Our evidence documents China’s strangulation in the manufacture of solar energy. China is seeking global dominance in this industry because it recognizes the importance of renewable energy and, if they achieve their dominance in solar energy, it will give them a huge advantage in gaining support. and the loyalty of many other countries around the world. In the game of global geopolitics, controlling energy supply is a vital weapon and advantage. In a hypercompetitive business world, being number one in energy production is much more important than being number one in the stock market or basketball shoes quotes.“
Almost 80% of the solar panels installed in the United States come from Chinese companies. China currently controls 64% of the polysilicon material worldwide against 10% of the United States market share, as well as almost 100% of the solar ingots and tablets.
The CPA says the United States needs to implement a mix of favorable tax credits, incentives and government procurement policies for solar installations on government properties in order to ensure the long-term future of a state-of-the-art solar energy supply chain. the tip. Otherwise, we can kiss you goodbye in our dreams of energy independence.
By Alex Kimani for Oilprice.com
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