Thursday, August 1, 2019

Federal Climate Action: Is Incremental Progress Better Than Nothing?

By Greg Hibbard, Energy Law Fellow

Since taking back the House in 2018, some Democrats in Congress have taken a strong
stance on climate change. Most are familiar with the efforts of Alexandria Oscar-Cortez and others to initiate the Green New Deal. However, the future of the Green New Deal remains uncertain. At the same time, Democrats have not slowed their efforts to create legislation to address greenhouse gas emissions. While relatively smaller solutions to climate change issues will create some progress, it may affect the ability to eventually move forward with the Green New Deal or a similarly ambitious program.

Oregon Representative Earl Blumenauer continues to be among the Democrats leading the charge against climate change. On July 18th, Representative Blumenauer (D-OR), along with Representative Lloyd Doggett (D-TX), introduced legislation aimed at reducing emissions from the transportation sector at the state and local levels. Both representatives—who are also members of the Safe Climate Caucus—recognize that cleaning up the transportation system will play a significant role in reducing future greenhouse gas emissions because the transportation industry remains the largest source of carbon pollution in the United States.

The proposed legislation, titled the Green Transportation Act, would direct local and state action to reduce transportation emissions. Specifically, the bill would require both cities and states to set emission reduction goals through their long-term highway and public transit planning processes. The bill would institute reporting requirements to the Secretary of Transportation to monitor how greenhouse gas emissions are being accounted for. Unfortunately, however, the bill does not mandate any specific emissions reduction goals for cities and states. Instead, the bill provides that states and municipalities “shall provide for reductions in such emissions.” Therefore, cities and states would have discretion in setting their emissions reduction goals in their transportation plans.

Because the transportation sector is a primary source of greenhouse gas emissions, the Green Transportation Act could play a key role in reducing these emissions nationwide. Due to the discretion provided for setting emissions reduction goals and its limited applicability to states and municipalities, the bill is not a complete answer to reducing transportation emissions to an appropriate level in light of climate change.  However, other notable Democrats have recently introduced legislation pertaining to emissions from the transportation sector.  Earlier this year, Senator and presidential candidate Kamala Harris (D-CA) proposed legislation focused on increasing the use of electric school buses across the nation. In May, Senator Merkley (D-OR) proposed amending the Clean Air Act to create a national zero-emission vehicle standard. Together, these congressional actions could create a longstanding and meaningful impact on the currently carbon-intensive transportation industry. However, even if these actions do have a meaningful impact on transportation emissions, they will only represent a partial solution to a portion of the broader climate problem.

Comprehensive regulatory approaches like the Green New Deal will be necessary to curb climate change to the requisite degree. Such a broad paradigm shift, however, has proven to be politically difficult. In addition to approving the suite of policy reforms called for under the Green New Deal, Congress and federal agencies must then promulgate statutes and rules to effectuate the identified goals. Even if Democrats take both houses of Congress in the next election, it is difficult to anticipate whether and when such a sweeping climate program could take effect.

Representative Blumenauer and Senator Merkley should be commended for their efforts to take action against transportation emissions. However, combating climate change through the Green Transportation Act and bills with similarly narrow scope may present a dangerous dynamic. If legislation addressing climate change is passed incrementally, it could reduce political capital and political will to pursue a more comprehensive approach. For example, with multiple incremental policies in place, some politicians may believe that an inherently expensive, comprehensive approach would no longer be necessary. Even further, the political compromises made to pass those incremental acts may make it more difficult to garner enough support for broader legislation down the road.

With respect to combating climate change, some progress is better than no progress. It remains to be seen whether comprehensive environmental regulation will be easier to achieve following the next election. Either way, Representative Blumenauer, Senator Merkley, and other climate leaders of Congress should be strategic about their responses to climate change to avoid the risk of undercutting Congress’s ability to adopt a comprehensive climate policy framework like the Green New Deal.   

Thursday, July 18, 2019

As Portland Continues to Grow, Are We Prepared to Address the Resulting Increase in Emissions?

By Greg Hibbard, Energy Law Fellow

Portland Bureau of Transportation
On June 30th, the popular food carts in the Alder Street pod in downtown Portland were forced to relocate so construction can begin on a new 35-story tower at 900 S.W. Washington St. The building will host a Ritz-Carlton hotel—Portland’s first five-star hotel—in addition to condos and office space. The Ritz-Carlton will include over 350 rooms and condos, eight penthouses, and a swimming pool on the 19th floor. At least a portion of what will become the fifth tallest building in Portland will be constructed using concrete panels. While the Ritz will represent a level of luxury not previously constructed in Portland, the new hotel represents the latest addition to a growing metropolitan area that has seen over 2,000 hotel rooms added downtown in the last 10 years. Because the hotel industry only represents a fraction of the growing city, Portland’s rapid rate of development begs the question of how much environmental harm is being accepted in the name of expansion and luxury.

A recent E&E News story explored the massive carbon footprint of modern structures. The story stated that 11% of global carbon emissions can be attributed to construction. The main emissions culprits, at least in terms of modern structures, are steel and concrete. The manufacturing process for steel involves heating iron ore in a blast furnace, which produces the byproducts of iron and carbon dioxide. According to E&E News, the World Steel Association estimates that producing one ton of steel releases 1.83 tons of carbon dioxide into the atmosphere. That quantity of emissions is equivalent to the emissions that result from a roundtrip drive from New York to Salt Lake City. Similarly, concrete production also generates significant carbon emissions. Producing cement is an interim step of concrete production. Cement is produced by baking limestone, which produces the undesired byproduct of carbon dioxide. One ton of cement results in roughly half a ton of carbon dioxide. According to the International Energy Agency, cement accounts for nearly 7% of global carbon emissions.

E&E News estimates that local governments and mayors have the ability to significantly reduce lifetime emissions for buildings—by up to 44%— by improving energy efficiency and incentivizing the use of greener building materials. The environmental costs of improved energy efficiency warrant a separate discussion. However, energy efficiency is another example of how convoluted emission solutions can be. For example, using triple-glazed windows may appreciably reduce heat loss and conserve energy but they are also more carbon intensive to produce and ship.

With respect to building materials, Portland has already taken strides to ensure that further construction is done in an environmentally friendly manner. For example, through its participation in C40 Cities, Portland joined cities from all around the globe to commit to obtaining the goals of the Paris Agreement. Through its C40 commitment, Portland has pledged to ensure that all new buildings are net-zero carbon by 2030. Portland Mayor Ted Wheeler has shown a personal interest in the C40 initiative, stating that “[e]nsuring Portland’s old and new buildings achieve net zero carbon use is an essential challenge that I am ready to take on.” Unfortunately, Portland’s efforts are inherently limited by state building codes. Portland is preempted from adopting its own building code requirements and must look to economic incentives or other strategies to accomplish many of the goals that Mayor Wheeler wishes to achieve.  

Regardless of what form the city’s policies ultimately take, increasing the use of low-carbon building materials presents an opportunity for Portland to further its goals of constructing net-zero carbon buildings. While buildings such as the future Ritz-Carlton will continue to require concrete and steel in the near future, it is time for Portland to begin looking for greener building options. Although there are currently identified options or alternatives to concrete and steel, such actions also present drawbacks. For example, steel can be produced in a less carbon-intensive manner if hydrogen is used to purify the iron ore rather than coal, but it may take another decade until such technology is readily available on a mass scale. Another potential option is to use different building materials, such as wood, as a substitute for steel or concrete. Even assuming wood is mechanically comparable to steel or concrete, using wood as a primary building material may bring about more environmental questions than answers. Among other issues, increased timber production threatens habitat for certain species and the ability of forests to sequester carbon.

At this point in time, there are no easy answers to the environmental issues posed by steel and concrete building materials. In the very least, we must consider the appropriate questions to address the carbon intensity of the most commonly used building materials. Can we clean up the production processes for steel and concrete? Are there economically and mechanically viable alternatives to building with steel and concrete? And if there are viable alternatives, such as wood, are their potential environmental impacts worth the switch? The forthcoming Ritz-Carlton Hotel in Portland is a sign of continued prosperity in the city. We must be prepared to account for the potential emissions cost of that prosperity.

Friday, July 12, 2019

Supreme Court Doubles Down on Auer Deference: Implications for Future Environmental Regulation

By Greg Hibbard, Energy Law Fellow

One June 26, the U.S. Supreme Court issued an opinion in Kisor v. Wilkie, written by Justice Kagan, upholding a doctrine that provides significant judicial discretion to federal agency decision-making. This doctrine is commonly referred to as Auer or Seminole Rock deference. With a potential dramatic change in administration in the next election, the Court’s decision begs the question of how Auer deference may play a key role in reversing the effects of four years of agency decisions and policies from the Trump Administration. This question is particularly poignant as it relates to the realm of environmental policy, as federal agency discretion plays a key role across the field of environmental law.   

Although judicial deference to federal agency interpretations of their own regulations has roots as far back as 1945, the 1997 Supreme Court decision in Auer is often credited with solidifying the doctrine. Auer deference is similar to that of the more well-known judicial doctrine of Chevron deference. Chevron deference provides that courts will defer to federal agency interpretations of ambiguous statutes, provided that the agency is charged with effectuating the statute and that the agency’s interpretation of the statute is reasonable. In a similar manner, Auer deference allows federal agencies to fill in the gaps of their own regulations—if the regulations are ambiguous (meaning the regulatory text is open to more than one reasonable interpretation)—with their own reasonable interpretations. While the Kisor decision does not directly implicate the future of Chevron deference, it may provide a signal for how the justices will vote if that issue is brought before the current Court.

In Kisor, the Court considered whether to put an end to Auer deference. The Court reviewed the doctrine in the context of a Department of Veteran Affairs (VA) decision to deny a Vietnam War veteran certain benefits associated with post-traumatic stress disorder. In this specific case, plaintiff Kisor was initially denied benefits in his 1982 application to the VA based on a psychiatric report that found he was not suffering from PTSD. In 2006, Kisor reopened his claim. This time, the VA agreed to provide benefits, in part, because of a new psychiatric report that concluded he was suffering from PTSD. However, the VA interpreted its regulations as only requiring the agency to provide benefits from the date of his reopened claim rather than his initial claim, as the plaintiff had requested.  The lower courts employed Auer deference to uphold the VA decision. All nine Supreme Court Justices agreed with the ultimate judgment to remand the case to the lower court to determine if Kisor should have been granted the benefits in question. However, the justices split along ideological lines when deciding whether to overrule Auer deference. With Chief Justice Roberts providing the swing vote, the doctrine survived with a 5-4 decision. Chief Justice Roberts, Justice Gorsuch, and Justice Kavanaugh each wrote separate concurrences to address the continued use of Auer deference.

Opponents of the Auer doctrine, including Kisor, argue that the doctrine provides an incentive to agencies to issue ambiguous regulations and then later impose interpretations on parties without satisfying the requisite notice and comment procedures. Additionally, Kisor also argued that Auer deference violates the separation of powers protected under the Constitution by granting an inappropriate degree of legislative and judicial function to the executive branch. Justice Gorsuch, appearing to side with Kisor, penned an impassioned concurrence and argued that “[i]t should have been easy for the Court to say goodbye to Auer.” However, Justice Kagan and the majority shot down each argument by emphasizing that certain limitations to the doctrine’s applicability will keep the agency discretion appropriately in check. Some scholars claim that Justice Kagan’s articulation of the doctrine will substantially restrict its application, while others maintain that Justice Kagan merely acknowledged limitations that were previously recognized by the Supreme Court.

While Justice Kagan highlighted multiple limitations of Auer deference, two are particularly noteworthy. First, the majority stressed that in order for an agency to receive deference, its interpretation must represent “fair and considered judgement.” This limitation prohibits courts from providing deference to agencies for convenient litigation positions or post hoc rationalizations. Second, Auer deference must also be applied in a manner that ensures that regulated parties are not met with the unfair surprise of a new interpretation. The majority explicitly noted that the Court has “only rarely given Auer deference to an agency construction conflicting with a prior one.” Therefore, if a new democratic administration retakes the White House in the next election, it will likely be limited in how drastically it can reinterpret regulations in place from the Trump Administration. A new administration would instead likely have to revise Trump Administration regulations through the lengthy notice and comment process.

This dynamic is especially important in the context of the environment. The Trump Administration has made a concerted effort to weaken environmental regulations. If a more environmentally conscious administration takes the reigns after the election, it will remain an uphill battle to re-establish a proper environmental regulatory scheme. Because Auer deference does not necessarily support abrupt changes in regulatory interpretations, a potential democratic administration may have to work with Trump Administration regulations longer than desired until they are replaced.

Discretion can, in many ways, be a double-edged sword depending on whether you agree with the party wielding it. If President Trump wins reelection, continued discretion will likely provide more risk to the environment. However, if a democrat wins the next election, the Kisor decision could turn out to be a big win for the environment. Once President Trump’s regulations are replaced, a new administration would be able to take advantage of Auer deference to fill regulatory gaps without always referring to more lengthy administrative processes. Further, the Kisor ruling appears to signal that Chevron deference will remain available to federal agencies.  While it may be difficult at first, the Supreme Court’s ruling in Kisor should be a key factor in agency efforts to heal and protect our environment in the years to come.  

Friday, June 14, 2019

BLM Identifies Preferred Alternative for Gemini Solar Project in Nevada: Is There a Better Alternative on the Table?

By Greg Hibbard, Energy Law Fellow

Department of Energy
On June 7th, the Bureau of Land Management (BLM) announced it published a Draft Environmental Impact Statement (DEIS) for the Gemini Solar Project in Nevada. The DEIS is available through the BLM’s website.  If this project is completed, it will establish one of the largest solar facilities in the world. Although this project has the potential to provide significant renewable energy benefits, it also threatens other environmental harms due to its immense size. Specifically, the project threatens the habitat of the endangered Mojave desert tortoise (desert tortoise).

The Gemini Solar Project will be located approximately 33 miles northeast of Las Vegas and will span roughly 7,100 acres. The project will have a nameplate capacity of 690 megawatts and is projected to operate for 30 years. The benefits of the project should not be understated. The solar power produced by the project will help the states of Nevada and California reach their renewable energy portfolio standard (RPS) goals. In particular, the project will provide energy to Las Vegas and southern California.  Although Nevada currently sources only 20 percent of its electricity from renewable sources, the state’s RPS goals require that share to jump to 50% by 2030. Additionally, the BLM estimates that California will need to acquire several more gigawatts of renewable energy to meet its 2030 goal of 60 percent renewable energy.

The BLM’s DEIS considers four potential actions to implement the project: the proposed action, which calls for the project to be constructed using “traditional” methods, an all mowing alternative, a hybrid alternative, and a no action alternative. These alternatives are primarily distinguished by construction method. The analysis contemplates two methods of construction: traditional and mowing. The analysis defines traditional methods to include a “disk and roll” technique that would completely remove the vegetation and compact the soil. On the other hand, the mowing method would simply require mowing the vegetation in the area to a height of 18 to 24 inches. Importantly, according to the BLM, much of the vegetation in the area is already shorter than 24 inches in height.  The methods also vary in how they would accommodate the desert tortoise. While both methods would require the installation of fencing around the project, the fencing installed under the traditional method would prevent the desert tortoise from accessing the area during the life of the project. Under the mowing method, the fencing would be lifted off of the ground to allow for tortoise movement. Another important difference in the methods is the potential for lasting impact on the area. If the project employs traditional methods of construction, vegetation in the area may require over a century to recover after the project is decommissioned. Mowing the project area, however, would largely maintain pre-project vegetation conditions throughout the life of the project. As a result, prior vegetation conditions would be restored quickly after the project is decommissioned.

In addition to the proposed action and all mowing alternative, the DEIS also considers a hybrid alternative that would entail mowing 65 percent of the solar development area (4,460 acres) and constructing the remaining 35 percent of the area (2,578 acres) with traditional methods. Lastly, the DEIS considers a “no action” alternative under which the project would not be built. At this stage of the process, the BLM identifies the hybrid alternative as the preferred alternative.

The potential impacts to the desert tortoise vary across the four alternatives. The project’s proposed action would effectively remove desert tortoise habitat across all 7,100 acres of the project—displacing 215 adult tortoises in the process. The BLM acknowledges that there would be no opportunity for tortoise relocation in the area and that this “take” of the species would be substantially adverse to the species and local population. The BLM appears to have identified the hybrid alternative as the preferred alternative, in part, because it would maintain habitat on 65 percent of the project area and allow tortoises to reoccupy the mowed portion of the project area after construction is completed. Under the hybrid alternative, the BLM anticipates that 183 adult tortoises would reoccupy the area and an additional 36 adults would be moved to another area. However, of the four alternatives considered, the all mowing alternative would best serve the desert tortoise. The analysis estimates that 220 adult tortoises would be expected to reoccupy the area with an additional 34 translocated to a nearby region if mowing was used across the entire project.

The BLM’s DEIS does not sufficiently explain why the hybrid alternative is preferred in light of the fact that the all mowing alternative would minimize effects to the desert tortoise. Economic factors may be one justification, as the all mowing alternative will likely require increased labor and may extend the duration of construction. However, the BLM’s analysis notes that increased labor would create more employment opportunities and economic output for local communities, including local tribes. Additionally, due to the large amount of vacant housing available, the labor increase would not affect housing or public services. Uncertainty may have also played a role in the BLM’s determination. The DEIS provides that few solar projects have been constructed using the all mowing method. Nevertheless, the potential uncertainty does not seem to have been a prevalent factor in the decision to identify the hybrid alternative as the preferred course of action because the hybrid alternative is primarily dependent on the mowing method.

The potential for one of the largest solar facilities in the world to come online in the relatively near future is exciting. However, the Gemini Solar Project risks seemingly unnecessary harm to the endangered Mojave desert tortoise and the surrounding environment. Based on the DEIS, there is no reason why the benefits of the project cannot be secured with relatively minimal impacts to the desert tortoise. Therefore, with its final EIS, the BLM should either fully explain why the hybrid alternative is worth the additional harm to the desert tortoise or identify the all mowing alternative as the most appropriate action. Interested parties can provide their own thoughts on the issue to the BLM until the 90-day comment period closes on September 5, 2019.

Tuesday, October 2, 2018

Jordan Cove Liquified Natural Gas Project: An Issue to Watch for in the Upcoming Oregon Gubernatorial Election

By Greg Hibbard, Energy Law Fellow

At the end of August, the Oregon Department of Energy (ODOE) placed another hurdle in
Governor Kate Brown
the way of the Jordan Cove Liquefied Natural Gas Project (Project). For those familiar with the issue, it may come as a surprise that the Project still has legs. The process for the Project began in 2004 and seemingly reached a failed conclusion in 2016 when the Federal Energy Regulatory Commission (FERC) refused to approve the requisite permits. However, the Project was revived after the election of President Trump. Within two months of the election, the primary corporate backer of the Project, Pembina Pipeline Corporation, filed a new application with FERC. Despite the recent resurgence, substantial obstacles still stand in the way before the project can come to fruition. Due to Pembina’s persistence and Oregon’s desire to be a leader in the green energy movement, this may become a hot issue in the upcoming race for Oregon governor.  

As a quick overview, the proposed Jordan Cove LNG project would construct a 229-mile pipeline from the city of Malin, Oregon to Jordan Cove in Coos Bay as a part of an overall scheme to establish an export terminal that would ship liquefied natural gas (LNG) overseas. The project would also include three 30-megawatt (MW) steam turbine generators. Overall, the pipeline and terminal would require a substantial investment of up to $10 billion. For more background information on the project, please see this article from Tarika Powell at the Sightline Institute.

Under Oregon law, an energy facility with the generating capacity of at least 25 MW must receive a site certificate from the Energy Facility Siting Council (EFSC). A project may proceed without a site certificate if EFSC grants an exemption pursuant to the applicable statutes and regulations. Most relevant to the Project, EFSC may grant an exemption for a “high efficiency cogeneration facility.” This exemption covers energy facilities, other than coal or nuclear plants, which sequentially produce “electrical and useful thermal energy from the same fuel source” and have specified electric generating capacities and heating values.

The Jordan Cove Project applied for a site certificate exemption in June 2018. By the end of August, ODOE staff recommended denying the application. While a staff recommendation is not controlling, it is a potential indicator of a final EFSC ruling. In response, the Project notified ODOE on September 12 that it would be submitting an amended application for a site certificate exemption.  Subsequently, the meeting at which EFSC was intended to make a ruling was canceled.  

Whether the Project will obtain an exemption from the site certificate requirement or go through the full certification process remains to be seen. However, the Project continues to follow the requisite state and federal processes. (An abbreviated timeline of state actions and information on relevant public comment periods is available on ODOE’s Jordan Cove Project webpage). In terms of the federal process, the Federal Energy Regulatory Commission (FERC) announced that it anticipates issuing a draft Environmental Impact Statement (EIS) in February 2019 and a final EIS by August 30, 2019.

As the fight over the Project continues, it should be an interesting issue to track in the upcoming November elections. Not surprisingly, the Project is highly polarizing, receiving support from trade unions and opposition from environmentalists. As Governor Kate Brown seeks election for her first full term as governor, she remains relatively quiet on the issue. Her office claims that due to the federalism issues at play, she would have no legitimate authority over approval of the project as governor. On the other hand, Governor Brown’s republican opponent, Knute Buehler, is strongly in support of the Project.

Regardless of the legal realities behind the Project, the Governor’s neutral position on Jordan Cove is inconsistent with Oregon’s recent efforts to be a leader in the fight against climate change. The first comprehensive analysis of the potential climate impact of the Project led one senior research analyst to conclude that the Project will “undermine the clean energy transition.” The same report also found that the Project “would make it impossible to achieve… Governor Kate Brown’s goal to have Oregon’s climate reductions line up with the targets of the Paris Accords.” Therefore, Governor Brown is potentially risking her climate reputation as she remains neutral on the Project.

Those interested in Governor Brown’s climate change objectives should keep an eye on the upcoming gubernatorial debates. At the time this post was published, the candidates had agreed to three debates within the span of eight days in October. The candidates will debate in Portland on October 2 and October 9. The final debate will take place on November 4 in Medford. This blog will continue to track the progress of the Project and may report on relevant actions or decisions in the future.

Tuesday, April 3, 2018

Reforming Oregon’s Electricity Regulatory Framework: An Ongoing Process

By Natascha Smith, Energy Law Fellow

It’s an exciting time for electricity regulation in Oregon. Under the direction of SB 978, which was passed by the state legislature in 2017, the Oregon Public Utility Commission (PUC) is engaging electricity stakeholders, including the general public, to investigate how developing industry trends, technologies, and policy drivers may impact the existing electricity regulatory system. SB 978 does little to restrict the scope of changes the PUC can consider in potentially reforming the regulatory framework applied to electricity in Oregon. Now is the time to place all options on the table and contemplate what changes will help Oregon meet its current electricity goals while allowing room to adapt to changing technologies and policy concerns.

On March 21, stakeholders attended a meeting convened by the PUC in Salem to discuss the state of Oregon’s electricity regulatory system. This was the second of six meetings convened by the PUC, which will ultimately culminate with a report from the PUC to the legislature later this year. At the March meeting, participants were split into groups representing customers, generation and service providers, investor-owned electric utilities, environmental concerns, equity and environmental justice, and the PUC Staff. Each stakeholder group in turn gave presentations responding to questions posed by the PUC about how the current regulatory process worked for their group, what challenges they saw, and what might be missing from the current regulatory structure. While all groups agreed that the current system ensures Oregonians have access to safe and reliable power, each group had unique thoughts on where the system has room for improvement. The stakeholder groups went on to identify areas of consensus and disagreement regarding the effectiveness of the current system at addressing specific areas of concern, such as facilitating competition and promoting environmental objectives.

Despite the technical jargon involved, this review of the electricity regulatory system is a public process. The review calls on all Oregonians to consider whether the current regulatory process achieves the goals important to us, and if not, how we can effectively incentivize the changes we want to see. The public can contribute to this process by attending PUC meetings on SB 978 or by submitting comments via email. If you’re simply interested in seeing how the meetings are conducted or what ideas different stakeholder groups bring to the table, the meetings are available to watch on the PUC website.

Tuesday, January 30, 2018

Solar Tariff Case Throws Shade on Growing Solar Industry: Part III

Last week, just before signing the legislation to end the government shutdown, the Trump Administration announced that the President had approved 30% tariffs on imported crystalline silicone photovoltaic (CSPV) modules and cells. As discussed in an earlier post, the United States International Trade Commission (ITC) had proposed a range of remedies in response to a trade dispute brought two by U.S. solar cell manufacturers. All the ITC’s proposed remedies were below the statutory maximum of 50% sought by Suniva and SolarWorld.
Department of Energy
The President’s imposed tariffs align most closely with the recommendations of ITC Commissioners David S. Johanson and Irving A. Williamson. The President adopted the Commissioners’ recommended 30% ad valorem tariffs on imported CSPV cells and modules that decreases by five percentage points per year. However, there are two aspects of the President’s tariffs that diverge from those recommendations that are worth highlighting.
First, the President doubled the quota of imported CSPV cells exempted from the tariffs. Commissioners Johanson and Williamson had recommended that an average of 1.3 gigawatts (GW) of CSPV cells be exempted from the tariffs each year. The President’s tariffs exempt 2.5 GW of imported CSPV cells each year. The increased quota should lessen the blow to the U.S. solar industry—slightly. This is an area where ITC Commissioner Meredith M. Broadbent departed from her colleagues. Commissioner Broadbent was the only ITC commissioner to propose a tariff-exempt quota for imported CSPV modules in addition to cells. By exempting only CSPV cells, the tariff appears to encourage some amount of module assembly in the United States.
Second, the President’s tariffs apply to the broadest number of countries possible. While all four members of the ITC recommended that tariffs be imposed on CSPV cells and modules imported from South Korea and Mexico, a majority of the commissioners recommended that Canada not be included in the tariffs. Nevertheless, the President did not exclude Canada from the tariffs. In addition to Canada, the President’s tariffs also apply to CSPV cells and modules imported from Thailand and the Philippines.
While the President’s tariffs will likely cause numerous job losses—the Solar Energy Industries Association predicts that 23,000 solar-related jobs will be lost in the United States as a result of decreased demand for CSPV installations due to the expected increase in CSPV prices occasioned by the tariffs—the outcome could have been much worse. For example, the President’s tariff on residential washing machines, announced at the same time as the CSPV tariff, exceeded the harshest recommendations made by the ITC.
At this point, the precise effects of the tariffs on the U.S. solar market are uncertain. However, negative effects are likely to be more pronounced on commercial solar projects where CSPV modules make up a greater share of project costs. In addition, there is still a great deal of uncertainty with regards to the implementation of the tariffs. For example, how will the quota of tariff-exempt CSPV be allocated, how will the Administration deal with the possibility that production may move to countries (e.g., India and Turkey) currently exempt from the tariffs? Finally, what will the World Trade Organization do with complaints regarding the Administration’s tariffs? All of this uncertainty casts a long shadow on the potential growth of U.S. solar capacity.