The latest actions by the Trump administration – including the recently proposed slashing of the Department of Energy's clean energy innovation budget by 72 percent, not to mention new tariffs on solar panel imports – call into question America's commitment to innovation and advanced energy leadership.
The tariffs are likely to raise the cost and slow deployment of solar energy in the U.S., with the aim of bringing back solar manufacturing jobs. These jobs, once a significant component of the U.S. solar sector, were mostly lost years ago lower labor costs abroad, as well as Chinese subsidies. But the U.S. also benefited from cheaper solar panels made abroad because falling prices increased solar installations. By 2016, there were already nearly four times as many jobs in solar installation as in solar manufacturing. And this disparity is only set to grow, despite the tariffs.
On the brink of bankruptcy, during the painful period after Chinese solar producers began competing in global markets, American manufacturers shut down old plants, streamlined them, and returned them to service – this time with far more robotics and far fewer workers.
Take First Solar's plant in Toledo, Ohio, for example, where automation and innovation are delivering state-of-the-art solar panels that can outperform Chinese-made ones, and at a lower price. Even JinkoSolar, a Chinese solar company that announced plans to build a U.S. factory following the solar tariff decision, will bring its own automated manufacturing platform, rather than returning with exported jobs.
The lower employment numbers associated with this new manufacturing model are rightfully raising anxieties, but the smaller staff that remains enjoys both higher wages and more stimulating work.
Moreover, not all parts of the value chain are of equal value, with some highly commoditized, low-margin functions – such as solar module assembly – dominated by countries such as China. Meanwhile, other specialized, higher-margin functions - such as silicon purification or wafer manufacturing - remain the strength of the United States. When the world deploys more inexpensive solar modules,regardless of where they are assembled, it creates more demand for the polysilicon wafer and ingot inputs that the U.S. excels in producing. America's manufacturing strength should come from innovation and ingenuity, rather than taxes on trade.
Of course, competitors in the clean energy race do not sit still, and other countries are seeking to overtake the U.S. in the very segments where it excels. Therefore, the United States must continue to innovate so that American products, processes, and intellectual property are the most valuable commodities of the clean energy future.
Slashing the budget of the Energy Department is shortsighted. Rather, the Trump administration should double down on the one area where the U.S. is truly without peer: energy research and development.
Almost every major global energy upheaval of the last half-century came with American government support, from nuclear power to shale drilling technologies to the modern solar industry. Newer government institutions, such as the "ARPA-E" innovation agency, are expanding upon this legacy with great success. Recent figures show China is on pace to overtake the United States in total R&D spending, a trend which could also soon carry over to energy R&D. Moreover, China is poised to capture more than half of global solar deployment and electric vehicle sales this year.
This is not only a cautionary tale for the Trump administration, but a call to action. The advanced energy race has not yet been lost. Indeed, it is only in its early stages. Last year was the eighth consecutive year in which worldwide clean energy investment totaled more than $250 billion. It will only grow over time.
CEOs of major oil companies are increasingly enthusiastic about advanced energy opportunities, and every day brings headlines of new acquisitions or partnerships in solar, wind, biofuels and beyond. Even one of President Donald Trump's top energy market regulators, Neil Chatterjee, has stated that "renewables, renewables, renewables" are the future of the U.S. power sector. The president should heed their cue, as the advanced energy race will be won by looking ahead – and not in the rearview mirror.
David Livingston is Deputy Director for climate and advanced energy of the Atlantic Council's Global Energy Center. He previously served in the Office of the U.S. Trade Representative.
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