The House Foreign Affairs Committee warned on Friday of the potential for massive jobs deserts in the transition away from fossil fuels as part of U.S. climate change policies.
Committee member Rep Kathy Manning (D-NC-6) said during a hearing titled Fostering American Competitiveness in Global Climate Action that her state has witnessed manufacturing job losses in economic transitions before.
“I live in a community that was devastated when textiles left and it has taken us 20 years to recover,” she said. “Fortunately now we have several electric battery companies that have opened, but it has taken years and years of work to bring that kind of manufacturing to my district. It has been a huge struggle and I am sure many areas are still struggling.”
Tariye Gbadegesin, Managing Director and Chief Executive Officer of the ARM Harith Infrastructure Fund in Nigeria was one of two panelists to discuss the issue with House Committee members. She said that she lived in Maine for many years, witnessed the closing of a furniture factory run by a family member, and its impact on the community many years later.
“In the U.S. there is a hope that things will happen automatically with the market,” she said, adding that the government will need to get involved in a renewable energy transition and have a long-term strategy in place.
Lisa Jacobson, President of the 30-year-old Business Council for Sustainable Energy highlighted tax credits being successful to help the solar industry, but that the U.S. needs long-term policies for a “strong market signal”.
Congress is considering longer-term incentives in a number of bills that now make up the Build Back Better Act – still in limbo.
The U.S. solar industry also had trade remedies in place, including worldwide tariffs on solar cells and modules, and anti-dumping duties against China – the leader in the solar industry. But the White House removed some of those tariffs in February, and solar importers are currently trying to persuade the Commerce Department to shelve an investigation into dumping and circumvention by Chinese multinational solar makers in Vietnam, Malaysia, Cambodia, and Thailand, where nearly 80% of U.S. solar imports are now coming from.
Jacobson showed House Committee members a brief slide show that depicted China as the leader in the renewables space.
“In terms of global energy investments, the U.S. is behind China,” Jacobson said. “We are not in a leadership position. We are not doing as much as they are. One or two years (of policy protection) doesn’t work for many of these technologies. You need to have incentives that match the business cycle. One to two years is not enough.”
China has long taken its cues from Brussels and Washington on renewables. Once the power centers of Europe and the U.S. said they were moving beyond fossil fuels because of climate change concerns, China quickly invested to become the manufacturing hub of solar, in particular, and has cornered the market on some metals – namely African sourced cobalt – used in EV batteries. China is also fast becoming the world’s No. 1 producer of wind turbines and will likely take that market away from the European multinationals within five years.
Vice-Chairman of the House Foreign Affairs Committee, Tom Malinowski (D-NJ-7), wondered out loud how the U.S. would deal with China on the issue of solar and renewables leadership.
“The government has not yet made that choice in a definitive way and most of us on this call would like the government and the Congress to definitively make that choice,” he said.
Last year’s bipartisan infrastructure bill, signed into law by President Biden, provides $80 billion in grants and low-interest loans for energy transition technologies and research. Build Back Better, Biden’s signature campaign pledge, has another $300 billion for renewable energy research and markets but that remains a pipe dream.
Renewable energy is fast becoming a commercial battleground pitting U.S. producers against multinationals, most of them Chinese, and U.S.-based installers of mostly Asian-sourced solar panels.
Trade groups backing solar energy companies, including the Solar Energy Industries Association (SEIA) and the American Clean Power Association, vehemently opposed the Section 201 solar safeguard tariffs and lobbied somewhat successfully for their removal this winter.
They are now warning Commerce against adding dumping and countervailing charges to southeast Asian exporters, saying the investigation is already hurting business. This is mostly because Chinese multinationals are not shipping product, stalling deliveries, and as CPA chief economist Jeff Ferry said recently, are holding the domestic solar business “hostage” in an effort to provide fodder for lobbyists in Washington.
SEIA’s membership is funded primarily by companies that install solar, design solar projects, consult on solar projects, and by the main Chinese solar companies. Only one Chinese company manufactures in the U.S., JinkoSolar, which has a solar panel factory in Florida.
Whenever there has been a decision to safeguard American solar manufacturers and give it the time it needs to invest and expand –as Jacobson said in the Q&A session today, without mentioning safeguard measures – SEIA has taken the side of the importer.
See CPA in The Washington Examiner on this issue, published on Friday.
If the U.S. is going to be a leader in renewable energy, it needs to have domestic supply chains less reliant on Asia for solar cells and solar panels. This allows for the U.S. to profit off the domestic solar market, as Asian companies have for years, and gives them a chance to invest in new solar technologies and manufacturing capacity. The alternative is for the U.S. to go from being fossil fuel independent, to being dependent on “green power” imports.
Gbadegesin, who was born in Nigeria, said that in light of today’s higher oil and gas prices, and problems with supplies in Europe due to its worsening conflict with Russia over Ukraine, the switch to renewables cannot be a one size fits all approach.
“Energy is the bedrock of an economy and everything else forms around that. One of the things we see that is emerging as a threat to meet climate goals is that the greatest threat to reducing emissions is increased poverty and impoverishment in all economies,” she said, noting that this includes the developed world as much as it does the developing ones.
“If you cannot address this shift in a way that does not create shocks for people, that allows for people to consume energy efficiently, affordably, and does not shock the economy, then we will fail,” she said. “You have to think of transitioning while wearing multiple hats because there are many countries and communities that depend on natural resources to maintain the status quo.”