A few months ago, seemingly every conversation in the solar industry included at least a mention of one divisive topic: the Auxin Solar tariff petition.
The Department of Commerce's investigation of Auxin Solar's claims that solar modules imported from Vietnam, Cambodia, Malaysia, and Taiwan were skirting U.S. trade duties against China brought the industry to a standstill overnight.
But talk of the Auxin Solar tariff petition is far rarer these days since President Joe Biden paused new tariffs on solar modules imported from Southeast Asia.
The Factor This! podcast from Renewable Energy World broke down the Auxin Solar tariff petition in a four-part series, including an exclusive interview with Auxin Solar CEO Mamun Rashid. Listen here:
What is the Auxin Solar tariff petition?In February 2022, Auxin Solar, a San Jose-based manufacturer of solar modules with about 150 MW of annual capacity, asked the U.S. Department of Commerce to determine whether or not a handful of solar manufacturers that are based in China but that have operations across Southeast Asia are engaging in unfair trade practices.
In a 105-page petition, Auxin Solar asked Commerce to determine that solar cells and modules assembled in Malaysia, Thailand, Vietnam, and Cambodia are circumventing and undermining the effectiveness of U.S. trade remedy laws.
The petition named 15 module manufacturers that it alleged are circumventing U.S. anti-dumping laws. The companies are LONGi Malaysia and Vietnam, Jinko Solar, JA Solar, Trina Solar, Canadian Solar, Talesun, Light & Hope, GCL, Boviet Solar, Green Wing Solar, HT Solar, New East Solar, Enalex, Shenglong PV-Tech, and Jintek.
The petition was called "frivolous" by the Solar Energy Industries Association trade group, which aggressively fought the petition.
Auxin Solar dispute came only months after Commerce rejected a similar petition brought by an anonymous group of solar companies that sought tariffs on a handful of companies that import modules from Malaysia, Thailand, and Vietnam.
The request had been made by American Solar Manufacturers Against Chinese Circumvention (A-SMACC) and sought anti-dumping and anti-circumvention (AD-CVD) tariffs. In a November 10 decision, Abdelali Elouaradia, director of the Commerce Department’s AD-CVD office, said that A-SMACC’s bid to keep the names of its member companies from the public prevented Commerce from gathering needed information for any inquiry.
In March 2022, Commerce announced that it would take up the Auxin Solar tariff petition, which could have brought retroactive tariffs on modules imported from Southeast Asia. The agency has the ability to levy tariffs of 50-200%, though Commerce Secretary Gina Raimondo assured industry advocates that the higher figure was "exceedingly unlikely" to be imposed.
The Biden administration faced a fierce backlash from clean energy advocates, who called for the urgent dismissal of the petition. Heather Zichal, CEO of the American Clean Power association, accused the White House of "empty rhetoric" for supporting clean energy while allowing the case to proceed.
Raimondo said her agency was statutorily required to carry out an investigation because the petition met all of the requirements under U.S. trade law.
In an exclusive interview with the Factor This! podcast from Renewable Energy World, Auxin Solar CEO Mamun Rashid said he wanted to "make sure investing in American manufacturing is a safe bet." He said solar module imports from Southeast Asian suppliers, which represent around 80% of the market, threatened Auxin Solar's survival.
Clean energy trade groups, led by ACPA and SEIA, launched a $5 million campaign against the Auxin Solar tariff petition and the Biden administration.
ACPA's Zichal, a former Obama administration official, said the groups were employing traditional political tactics like digital and television advertising.
"I've been working to deploy solar for two decades and I never thought that I'd be having to raise money to run a campaign against the Biden administration," Zichal said.
Amid the treat of additional tariffs, Lightsource bp Americas CEO Kevin Smith told the Factor This! podcast that one of the world's largest solar developers was weighing the political risks of U.S. investments.
During his interview, Smith said that during the 1990s and early 2000s he was building power projects around the world, including southern Africa, Asia, and Latin America. When he came back home, colleagues would ask him about political risk in those markets. "And, you know," he said, "the areas where I've had the most political risk have actually been in the U.S."
With the recent tariff issues roiling domestic solar markets, "once again, the U.S. is delivering with political risk."
Pressure from ACPA, SEIA, and others on behalf of developers, like Smith, led President Biden to pause for two years any new tariffs on solar modules imported from four Southeast Asian countries that are the subject of a federal trade investigation.
In addition to the pause on new tariffs, Biden invoked the Defense Production Act to support domestic solar manufacturing.
Rashid, head of Auxin Solar, the company behind the tariff petition, called Biden's executive order "unconstitutional."
"(The president) has opened the door wide for Chinese-funded special interests to defeat the fair application of U.S. trade law. Since filing this case, Auxin has been well underway to scaling up. If the President will follow through on his stated intent to support the U.S. domestic industry – including grants to scale and produce upstream inputs like cells and wafers – Auxin is ready, willing, and able to meet that challenge."
What's next for the Auxin Solar tariff petition?The Commerce investigation of the Auxin Solar petition continues. Any duties levied against Southeast Asian module imports would be imposed after the 24-month period expires. Biden's executive order also alleviated any concerns of retroactive tariffs.
In August, Commerce reportedly delayed a preliminary decision on the AD/CVD investigation.
At the request of Auxin Solar, which filed the petition, Commerce pushed back its deadline for an initial ruling to November 28. The news was reported by the news site Politico.
Rashid said in an emailed statement to Renewable Energy World that respondents to the Commerce investigation are to blame for the case's delayed timeline because "they obstructed the process by seeking lengthy extension of time to submit necessary data to Commerce." Commerce will now have the time it needs to properly investigate the case, he said.
The recently enacted Inflation Reduction Act does not change the course of the Auxin Solar tariff petition, but it does take meaningful steps to address the underlying issue.
Rhone Resch, who led SEIA from 2004 to 2016, estimates the U.S. could rebuild its domestic solar supply chain in 2-3 years with the appropriate policies.
He said his "biggest regret" was not prioritizing domestic solar manufacturing more as the head of the industry's top trade group.
"(The industry) became addicted to lower pricing, and we lost track of prioritizing domestic manufacturing," Resch said during an interview for the Factor This! podcast. He said his biggest regret is the fact that "we didn't prioritize domestic manufacturing in a way that we should have." As a result, "there's multiple repercussions from that that we're feeling today."
Biden's two-year pause on new tariffs, and substantial incentives for domestic manufacturing throughout the solar value chain, have created a runway for the industry to finally address its supply disparities.
The Inflation Reduction Act included provisions of the Solar Energy Manufacturing for America Act (referred to in industry circles as SEMA).
Elements include:
- 11 cents/watt for integrated modules
- 7 c/w for non-integrated solar modules
- 4 c/w for cells
- $12/sq. m. of wafer
- $3/kg of polysilicon
- 40 c/sq. m. of polymeric backsheet
