With supply chain challenges flowing from the COVID pandemic continuing and inflation being exacerbated by the ongoing Russian war in Ukraine, the Biden Administration has been focused on finding ways to reduce inflation while at the same time trying to move the U.S. towards greater reductions in greenhouse gases as part of the U.S. commitments under the Paris Agreement.
The U.S. has seen large increases in installaed renewable energy in recent years, although there has been strong pushback from solar installers to efforts by domestic producers to address possible circumvention of existing trade remedy measures. See, e.g., PV Tech, Nearly all US solar companies expecting ʻsevere or devastating impactʼ of anti-circumvention investigation, April 6, 2022, https://www.pv-tech.org/nearly-all-us-solar-companies-expecting-severe-or-devastating-impact-of-anti- circumvention-investigation/. There has been some Congressional support for not pursuing the anticircumvention investigations, although such investigations are supposed to be fact based versus politically driven or opposed. See, e.g., PV Magazine, House of Representatives joins growing opposition to solar anti-circumvention investigation, May 15, 2022, https://pv-magazine-usa.com/2022/05/19/house-of-representatives-joins-growing-opposition-to-solar- anti-circumvention-investigation/.
On June 6, 2022, President Biden issued five Memoranda on Presidential Determinations Pursuant to Section 303 of the Defense Production Act of 1950, as amended, addressing (1) Electrolyzers, Fuel Cells, and Platinum Group Metals, (2) Insulation, (3) Electric Heat Pumps, (4) Solar Photovoltaic Modules and Module Components, and (5) Transformers and Electric Power Grid Components. The President also issued a Declaration of Emergency and Authorization for Temporary Extensions of Time and Duty-Free Importation of Solar Cells and Modules from Southeast Asia. All documents are due to be published in the Federal Register on June 9, 2022.
The Memoranda are similar in language. The one on solar photovoltaic modules and module components is copied below.
“Memorandum on Presidential Determination Pursuant to Section 303 of the Defense Production Act of 1950, as amended, on Solar Photovoltaic Modules and Module Components
“JUNE 06, 2022
“MEMORANDUM FOR THE SECRETARY OF ENERGY
“SUBJECT: Presidential Determination Pursuant to Section 303 of the Defense Production Act of 1950, as amended, on Solar Photovoltaic Modules and Module Components
“Ensuring a robust, resilient, and sustainable domestic industrial base to meet the requirements of the clean energy economy is essential to our national security, a resilient energy sector, and the preservation of domestic critical infrastructure. Therefore, by the authority vested in me as President by the Constitution and the laws of the United States of America, including section 303 of the Defense Production Act of 1950, as amended (the “Act”) (50U.S.C. 4533), I hereby determine, pursuant to section 303(a)(5) of the Act, that:
“(1) solar photovoltaic modules and module components, including ingots, wafers, solar glass, and cells, are industrial resources, materials, or critical technology items essential to the national defense;
“(2) without Presidential action under section 303 of the Act, United States industry cannot reasonably be expected to provide the capability for the needed industrial resource, material, or critical technology item in a timely manner; and
“(3) purchases, purchase commitments, or other action pursuant to section 303 of the Act are the most cost effective, expedient, and practical alternative method for meeting the need.
“Pursuant to section 303(a)(7)(B) of the Act, I find that action to expand the domestic production capability for solar photovoltaic modules and module components is necessary to avert an industrial resource or critical technology item shortfall that would severely impair national defense capability.
“Therefore, I waive the requirements of section 303(a)(1)–(a)(6) of the Act for the purpose of expanding the domestic production capability for solar photovoltaic modules and module components.
“You are authorized and directed to publish this determination in the Federal Register.
“JOSEPH R. BIDEN JR”
Only the solar modules and components memo was accompanied by a waiver on import duties on certain products from selected countries not currently subject to trade remedies. The emergency/waiver decision is copied below.
“Declaration of Emergency and Authorization for Temporary Extensions of Time and Duty-Free Importation of Solar Cells and Modules from Southeast Asia
“JUNE 06, 2022
“Electricity is an essential part of modern life that powers homes, business, and industry. It is critical to the function of major sectors of the economy, including hospitals, schools, public transportation systems, and the defense industrial base. Even isolated interruptions in electric service can have catastrophic health and economic consequences. A robust and reliable electric power system is therefore not only a basic human necessity, but is also critical to national security and national defense.
“Multiple factors are threatening the ability of the United States to provide sufficient electricity generation to serve expected customer demand. These factors include disruptions to energy markets caused by Russiaʼs invasion of Ukraine and extreme weather events exacerbated by climate change. For example, in parts of the country, drought conditions coupled with heatwaves are simultaneously causing projected electricity supply shortfalls and record electricity demand. As a result, the Federal Energy Regulatory Commission and the North American Electric Reliability Corporation have both warned of near-term electricity reliability concerns in their recent summer reliability assessments.
“In order to ensure electric resource adequacy, utilities and grid operators must engage in advance planning to build new capacity now to serve expected customer demand. Solar energy is among the fastest growing sources of new electric generation in the United States. Utilities and grid operators are increasingly relying on new solar installations to ensure that there are sufficient resources on the grid to maintain reliable service. Additions of solar capacity and batteries were expected to account for over half of new electric sector capacity in 2022 and 2023. The unavailability of solar cells and modules jeopardizes those planned additions, which in turn threatens the availability of sufficient electricity generation capacity to serve expected customer demand. Electricity produced through solar energy is also critical to reducing our dependence on electricity produced by the burning of fossil fuels, which drives climate change. The Department of Defense has recognized climate change as a threat to our national security.
Terence Stewart, former Managing Partner, Law Offices of Stewart and Stewart, and author of the blog, Current Thoughts on Trade.
To read the full commentary from Current Thoughts on Trade, please click here.