Biden invoked the Defense Production Act to fund U.S. solar panels, but it isn’t enough to beat China on price

For years, U.S. solar panel makers have accused those four countries of essentially re-exporting Chinese panels with a new label of origin, helping Chinese manufacturers circumvent U.S. customs duties. (The Commerce Department is investigating the accusation.) Biden’s executive order suggests the president is willing to look the other way on Chinese manufacturers skirting U.S. tariffs, so long as it benefits U.S. buyers.

China is the world’s largest producer of solar panels, photovoltaic cells, and the materials necessary to make them. While U.S. imports of Chinese solar panels have declined 86% since the tough 250% levies were introduced in 2011, dwindling to under $400 million worth of equipment from $2.8 billion, imports from the four Southeast Asian countries have soared 868%.

Fears that Southeast Asian suppliers would be subject to tariffs if the Commerce Department determined they were just transhipping Chinese products—disguised as their own goods—has stalled the rollout of the U.S.’s solar power initiatives. Forecasts for capacity installed in the next two years have dropped 46% since the investigation began in March, according to trade group Solar Energy Industries Association.

Biden’s order means that, whatever the finding of the Commerce investigation, U.S. companies can continue to import panels from Southeast Asian countries without worrying costs will triple, at least for the next two years.

Building more solar panel capacity is a key measure for achieving Biden’s climate change goals. But, the fact is, the U.S. is nowhere near ready to meet its solar power targets domestically and needs to import panels from China either directly, or through a convenient reroute via Southeast Asia.

In a gesture to U.S. domestic manufacturers, Biden also earmarked funding through the wartime Defense Production Act (DPA) to subsidize the development of the country’s local solar industry. But an industry lobby group dismissed the funding as a “pittance.”

According to Bloomberg, the federal government has $434 million available in its DPA fund, for all DPA activities, not just for supporting solar projects. But building enough domestic solar manufacturing capacity to replace the volume of solar panels the U.S. currently imports would cost around $4 billion. China, meanwhile, already has a head start on funding its industry, and is unlikely to slow down development enough for the U.S. to catch up.

China has another cost advantage that the U.S. will find it difficult, if not impossible, to replicate: completely integrated supply chains. China can, and does, produce virtually every component it needs to complete a solar panel onshore, which means it saves time and money by not importing key manufacturing parts. If the U.S. wants to become entirely self-sufficient in solar panel production, it will inevitably pay higher costs.

Eamon Barrett
eamon.barrett@fortune.com
@eamonbarrett88

CARBON COPY

Pollution at production

China’s leading electric vehicle maker BYD is under investigation for pollution—although not the kind normally associated with cars. Residents living in areas near BYD’s production plant in Changsha have complained that toxic pollutants in the paint BYD uses to coat its cars are contaminating the environment, causing nosebleeds, breathing problems, and vomiting. The investigation serves as a reminder that the pro-planet branding propelling EV makers forward often overlooks the harmful inputs manufacturers rely on to build exhaust-free cars. FT

No energy for a six-day workweek

Pakistan is reducing its official workweek from six days to five as the country struggles through a major energy crisis that has caused rolling blackouts across the country. The six day workweek is new to Pakistan. The country’s new prime minister, Shehbaz Sharif, extended the workweek after his election in April, with the hopes of boosting productivity. But soaring fuel prices, a weakening currency, and peak summer demand have conspired to overwhelm Pakistan energy suppliers. Reuters

Smaller site, greater waste

Small modular reactors (SMRs)—mini nuclear power plants that could provide a solution to national energy shortages by plugging into regional grids—might actually produce more nuclear waste than their larger siblings. By some measures, SMRs produce five times as much waste as large reactors, although SMR manufacturers contend that “five times a small number is still a small number.” In the U.S., however, any nuclear waste is a problem because regulators still lack a longterm plan for how to dispose of it. Wired

‘Imprisoned in a sauna’

Here's a long read on an overlooked population suffering in the swell of extreme weather events caused by climate change: U.S. prisoners, trapped en masse inside dilapidated buildings, with no control over their environment. Heat waves are a particular menace for inmates confined to concrete cubes. Not all prisons have adequate air conditioning, windows don’t have blinds, and there’s little scope for moving inmates to cooler parts of the prison system. During the heat dome in Washington state last year, prisoners were left dripping with sweat, sitting in their cells. Others collapsed with heat stroke. Mother Jones

IN CASE YOU MISSED IT

‘Greenhouses on the moon:’ After growing plants in lunar soil, scientists see huge implications for crops in outer space—and on Earth by Bernhard Warner

A supply shock just hit the energy market. Here’s why that could be bad news for summer travelers—and the global economy by Will Daniel

Deutsche Bank top executive resigns amid allegations over fraudulent ESG funds by Christiaan Hetzner

New York suspends gas tax for rest of year by Chris Morris

HP has a big sustainability hit with at least $3.5 billion in realized revenue: ‘This is only a small slice of what we know to be the case’ by Aman Kidwai

Climate shareholder resolutions flood into proxy season for a record year by Rachel Layne

Why new SEC rules could deliver a victory for climate-conscious investors by Shane Kane

CLOSING NUMBER

36.3 billion tons

There is more carbon dioxide in the Earth’s atmosphere today than at any other point during the last 4 million years, the National Oceanic and Atmospheric Administration said on Friday. Atmospheric carbon levels have ballooned to 50% above their pre-industrial average with emissions totaling 36.3 billion tons last year—the highest in human history. Humans have pumped 1.6 trillion tons of CO2 into the atmosphere since the industrial revolution began in the late-19th century.