Trump's energy policy: Is China the real winner?
Authored by Xixi Chen, manager, EDF+Business
This week, President Trump's administration announced plans to cut the Department of Energy’s (DOE) renewable energy and energy efficiency program budgets by 72 percent, according to a leaked draft of the DOE budget for fiscal year 2019. This is the second major blow to the renewable energy industry, coming only days after Trump imposed a 30 percent tariff on solar imports.
I find this ironic. On Tuesday, Trump stood before our country to deliver his first State of the Union address. It was a story on “America First,” and domestic policy took the center stage – tax cuts, trade, the economy, jobs … and more jobs. But as he praised the accomplishments in these areas over the past year, I couldn’t help but see the other side: the opportunities we’re missing and the jobs we’re giving up (now even more so).
I’m talking about jobs in the clean energy and sustainability economy. An industry that is growing faster than any other sector. According to Environmental Defense Fund's (EDF) new clean energy jobs report, the solar industry grew 24.5 percent, and has experienced a 68 percent annual growth rate over the last decade. And with this growth comes jobs. Solar jobs now outnumber coal jobs 1.6 to 1 across the country. Today’s increasingly globalized supply chain is partially responsible for this enormous growth.
Trump’s decision to impose a 30 percent tariff on solar imports from Asian markets, including my home country, China, will set this progress back. Here’s what a tariff could do:
- Aggravate the global trade environment. We’re part of a global economy, with complex supply chains spanning across international borders. China’s aggressive production of solar tapped into this supply chain in order to supply the global demand. As a result, other countries are benefiting from inexpensive solar imports that have caused prices to drop and a booming global solar market to exist. A tariff will shortchange the global solar supply chain, reduce demand, and slow solar installations.
- Cut jobs. The vast majority of U.S. solar jobs are not in manufacturing. Solar installation jobs – the fastest growing job in the country – account for over half (54 percent) of total solar jobs, with other positions in sales and distribution, project development, and operations and maintenance accounting for about a third. What's left – manufacturing – accounts for only 15 percent of solar jobs. The tariff will slow down the installation of solar and will ripple down the supply chain, hitting the already vibrant, domestic jobs in installation the hardest.
- Reduce corporate investments. Companies want clean energy. It mitigates risks, cuts costs on energy, and reduces their carbon footprint – it’s smart business. That’s why 117 companies have made a commitment to source 100 percent of energy for operations from renewable energy sources under RE100. Now, it’s going to be harder to finance, and corporate procurement of clean energy projects may be put to rest or on hold. In just one week, already 409 clean energy business leaders have sent a letter to the President opposing the tariff decision.
- Slow innovation. A tariff isn’t going to even the playing field for the U.S. and China, or bring enough domestic manufacturing. In fact a protectionist tariff might actually discourage U.S. innovation in clean energy technologies.
What we can learn from China
In 2017, global investment in renewable energy reached the second highest annual figure ever at $333.5 billion. Much of this was due to the enormous boom in solar installations in China, setting a record year for the country. In fact, over half of the world’s solar investment came from China, reaching $86.5 billion. This market has created over 3.5 million jobs in China’s renewable energy sector, with new investments projected to create 13 million more by 2020. That’s a lot of jobs. China is also investing in renewable energy R&D in an effort to advance innovation. More research has the potential to lower costs, in turn driving market growth and creating even more jobs.
Yet while China assumes the lead, the U.S. is heading in the opposite direction. The administration’s attempt to squash federal investment in R&D for renewable energy and energy efficiency – an area the government has played a critical role in in the past – not only sets the entire clean energy industry back, but represents a major blow to America’s economy and the thousands of jobs the industry supports.
Just last week at the World Forum in Davos, I heard EDF’s president, Fred Krupp express this same fear. “The whole world is demanding clean energy and electric cars. These are the technologies of the future, and China is moving heavily in that direction. Of course, I worry about the U.S. not moving in that direction. I also worry that the U.S. is missing the market opportunities and leaving them to China.”
We need to be thinking about the future, not moving backwards towards Trump’s “beautiful coal,” because first, that’s far from the truth, and second, it’s not where the future is. Long-term economics proves the appetite for solar is going to remain. That’s why Congress – for the sake of American jobs – should reject the administration’s attempt to slash funding, and instead invest heavily in R&D of new clean energy technologies.