Ultimately, energy independence in today’s world is an illusion in the age of globalization because market hyperconnection makes it impossible. However, it is a battle cry that never ends and ends up being a semantic argument, the result of which depends on how you define “independence”.
The American shale boom briefly restarted the debate on something the nation had long considered a distant dream: energy independence.
But that was before the Covid-19 arrived, and with it a complete flight to renewable energy.
The idea that the country could be self-sufficient by producing enough energy to sustain its entire population and industries was first put forward by Nixon when he declared war on foreign oil during the 1970s oil crisis. But with the constant shift to low-carbon energy, America may not be any closer to achieving that energy utopia of four decades ago.
In fact, the energy transition could simply mean that US energy dependence is now shifting from OPEC’s headquarters, Saudi Arabia, to the largest manufacturer of renewable energy equipment and the largest importer of Saudi oil: the China.
And this is because, over the course of a decade, China has become the most dominant manufacturer of equipment that produces renewable energy, especially solar energy. Related: Pemex in Mexico has discovered thousands of barrels of oil
In fact, 7 of the top 10 solar power manufacturers worldwide are Chinese companies, with only First Solar Inc. (NASDAQ: FSLR) i 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 invest $ 1.7 trillion in federal spending on renewable energy infrastructure in an attempt to turn the United States into a a 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 coffers of the Middle Kingdom and with it our dreams of energy independence.
Biden solar wall
The solar sector has become the best-performing corner of the clean energy universe during the pandemic and has continued to shine after Biden was declared president-elect.
Unfortunately, the current year has been anything but friendly for the solar sector, with the Invesco Solar ETF (TAN) fell 6.6% versus 5.3% YTD gain in S&P 500.
The settlement may be based primarily on overvaluation concerns, but also on growing concerns about China’s sector limitation.
The irony of it all is that China could end up expanding its rule during Biden’s tenure.
In January 2018, the Trump administration implemented Section 201 solar tariffs on imported cells and modules in the midst of a trade war with China. A presidential proclamation issued in October seeks to increase these tariffs and eliminate an exemption for double-sided solar panels. Related: Another investment bank is betting on $ 100 worth of oil
While the evidence is mixed as to its effectiveness, the cons seem to outweigh the advantages. On the one hand, the import limit of 2.5 gigawatt solar cells provided some support for the domestic solar module manufacturing industry and also contributed to a level playing field.
But the wrong done is not very despicable. According to The Hill, 2018 solar tariffs have significantly hurt the U.S. solar sector by destroying more than 62,000 jobs and nearly $ 19 billion in new private sector investment. Tariffs, which started at 30% in 2018, made some imported panels more expensive, with the price of high-efficiency PERC modules (passive emitter) almost doubling in the United States compared to the prices of other tailor-made markets. that the modules leave the factories. in China and Southeast Asia. In fact, Greentech Media estimates that when purchased in quantities of several megawatts, these 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 up to Trump’s rates, as shipping costs range from 1.5 to 2 cents per watt.
That the U.S. solar sector has continued to thrive despite tariffs (not for that reason) is a true testament to the strength of the solar momentum. In fact, module imports from China have been on a growth path since January 2019. Despite a combination of section 201 tariffs, countervailing duties and anti-dumping laws. Biden is expected to order the International Trade Commission to assess these tariffs and possibly repeal them in light of the damage they have caused to the solar industry downstream in that country. Even the partial elimination of these punitive tariffs on solar modules and investors is expected to have positive effects on solar development.
But when it comes to increasing U.S. production of solar modules and parts, the administration is facing a tough battle.
Most critics claim that Trump’s protectionist trade policies, such as tariffs, have fallen behind and only serve to hinder national 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 protection over solar energy manufacturing. China seeks global dominance of this industry because they recognize the importance of renewable energy and, if they achieve their dominance in solar energy, this will will provide a great advantage in gaining the support and loyalty of many other countries in 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 the number u in energy production is much more important than being number one in stock quotes.or basketball shoes.“
Almost 80% of solar panels installed in the United States come from Chinese companies. Currently, China controls 64% of the polysilicon material worldwide compared to 10% of the U.S. market share, as well as about 100% of solar ingots and wafers.
The CPA says the U.S. needs to implement a mix of favorable government tax credits, incentives, and procurement policies for government-owned solar installations in order to secure the long-term future of a U.S. solar supply chain. from end to end. Otherwise, we can say goodbye to our dreams of energy independence.
By Alex Kimani for Oilprice.com
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