A Different Trade Tactic


Since last October's Solar Power International conference, when SolarWorld announced its anti-dumping complaint and countervailing-duty petition against China, international trade issues have held the industry's collective attention – and inspired impassioned debate on both sides.

The U.S.' eventual strategies for bolstering domestic PV manufacturing could also encompass remedies from outside the Department of Commerce and International Trade Commission.

Recent legislation proposes fighting inexpensive Chinese imports not with tariffs, but with the removal of the investment tax credit (ITC).

In late May, Sens. Charles Schumer, D-N.Y., and Sherrod Brown, D-Ohio, introduced legislation that would add a domestic-content requirement to ITC eligibility. Thus, projects using PV modules manufactured in China would be ineligible for the 30% ITC.

Under Schumer and Brown's proposal, 70% of a solar module's components would need to be U.S.-made, unless the final point of manufacture is in the U.S., in which case 50% of the parts must be U.S.-made.

Schumer acknowledges in a press release announcing the bill that such requirements are ‘tough.’ But he and Brown insist that Chinese manufacturers already receiving incentives in their home country should not enjoy additional incentives in the form of ITC eligibility.

Needless to say, within the PV industry, the ITC is generally regarded as a critical piece of the solar power cost equation. Currently scheduled to expire in 2016, the credit is already on the lobbying radar of industry groups seeking to secure an extension.

Does it make sense, then, to remove this incentive, for even a portion of installations? Any provision that raises system costs runs counter to long-term goals and ultimately hurts the industry, according to one school of thought.

On the other hand, precedents for domestic-content requirements have been set in other solar markets (e.g., Ontario). Moreover, proponents claim, limiting ITC eligibility could help U.S. manufacturers.

What do you think?

This Sun Dial column was originally published in the June 2012 issue of Solar Industry.

Editor's note: To submit your own contribution to Viewpoints, email Jessica Lillian at jlillian@solarindustrymag.com.

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