LP #26: Biden’s Puzzlingly Bad Solar Panel Decision
Author: Gary Winslett
The Puzzle: Why Do Something So Dumb?
In 2018, the Trump administration imposed new tariffs on solar panels as part of a wave of protectionism to signal its commitment to America First economic nationalism. Those tariffs on solar panels were set to expire on February 6, 2022. So, all the Biden administration had to do for solar panels to get cheaper was do nothing. They did not have to persuade Congress to pass a law or go through some challenging regulatory process but just allow it to happen on its own. Instead, they decided to maintain those tariffs for another four years, albeit with some exemptions. Their decision to do that is so dumb that it is genuinely puzzling. Why would they make solar panels more expensive than they need to be?
Climate change is one of the four or five most important challenges of the twenty-first century. One of the main thrusts of the fight against climate change is to electrify almost everything and make that electricity carbon-free. Solar panels are obviously a major part of that effort and so we should want them to be as cheap as possible so that we can put them on *everything.* The Biden Administration is counting on this to meet its climate goals. They want solar to generate 40% of U.S. electricity by 2035 (it’s 4% now). But then they extended these solar panel tariffs that significantly slowed deployment of solar energy.
More broadly, the way to convince political moderates in America to lean into a fight against climate change is to convince them that doing so is not a sacrifice but rather is in their best interests. There are few better ways of doing so then making solar panels so cheap that homeowners can easily get them installed on their roofs, thus lowering their energy bills and (incidentally but also importantly) lowering their carbon footprint.
These tariffs were also economically counterproductive. Because most employment in solar energy in the United States are in installation and maintenance, solar tariffs are also a jobs killer, leading to 62,000 fewer jobs being created in the solar industry between 2017 and 2021 than otherwise would have been the case. Prior to these tariffs, the Bureau of Labor Statistics projected that ‘solar panel installer’ would be the single fastest growing job in the United States between 2016 and 2026. What’s more, these are the exact kind of good jobs for less educated workers that politicians from both parties say that we desperately need more of. While those job losses are on the Trump administration, it is worth nothing that the Biden administration looked at that and thought “great, let’s do more of that!” Meanwhile, U.S. producers did not even gain market share as a result of the tariffs, so not only are the tariffs raising prices and hurting employment, they aren’t even doing the thing their proponents want them to do. Even the Biden administration itself seems to know that this is dumb. You can tell that because they excluded bifacial cells, which were a burgeoning technology when these tariffs were put in place but are even more important now, and raised the quota on the number of panels that can be imported before the tariffs kick in. So they know that being protectionist on solar panels has big drawbacks. So then why do this? Why do something this dumb that you know is dumb?
The Answer: Left-Nationalism
Nationalism these days is usually associated with the political right and, more specifically, with the populist right. Given Trump, Brexit, and Orban, among other examples, that’s understandable but there is such thing as left-nationalism and the Biden Administration seems to be embracing it.
Nationalism is usually understood to mean dividing the world into an “us” and a “them” with right-nationalists defining that a set of people sharing some combination of history, language, culture, religion, and ethnicity who share a common space, with politics being a competition for resources between the “us” and the “them.” Left-nationalism takes that basic logic but removes most of the cultural elements of that nationalism and replaces them with the trappings of organized labor. For right-nationalists, the “us” are ‘real Americans’ who drive trucks, go to church, hunt, and live in small towns or rural areas. For left-nationalists, the “us” are politically favored workers.
Left-nationalism politically favors manufacturing workers because those workers conjure up images of the halcyon days of union-dominated manufacturing in the 1970s (while conveniently forgetting the high inflation and other economic problems of the 1970s). This is why, even though there are way more workers in services that would benefit from trade liberalization, many on the left want to prioritize manufacturing workers. Manufacturing is tied in with an economic nostalgia that many older voters, including older progressives, find appealing. This attitude may help explain the Biden administration general penchant for protectionism and counterproductive Buy American policies.
It is also important to notice that, in both its leftism and its nationalism, this mentality cannot really imagine markets or business creating positive social outcomes without the state forcing it or paying it to do so. This is clearly happening in the solar panels case. The same day the White House announced its decision, the House passed a bill that included $600 million in funding for solar energy. So rather than let the market operate efficiently in a way that would help fight climate change, Democrats are trying to simultaneously tax and subsidize solar energy. Taxing something and subsidizing it at the same time is like pressing the gas pedal and the brake pedal at the same time; it is so obviously ridiculous that it is almost laughable, and yet here we are.
When Climate Politics Isn’t Really About the Climate
This left-nationalism shows too that for at least some progressives, climate change activism was never really about climate change but instead about a broader anti-capitalism. Whenever climate action necessitates state action they’re for it, but whenever fighting climate change means going in a pro-market or less statist direction, they get cold feet. These progressives seem to want climate action to actually be a kind of solidarity sacrifice for the common good. To them, there is virtue in not being selfish and so they have a hard time imagining the selfishness they see in capitalism as ever aligning with effectively fighting climate change.
This means they only ever get geared up over climate politics when it fits well with their over-arching politics. When the Trump administration tried to shrink Bears Ears national monument at the behest of the oil and gas industry, there was understandable outrage from environmentalists, but then when the Biden administration makes solar panels more expensive than they need to be, there’s nary a peep. For these environmentalists, being pro-environment only gets leaned into when and if it’s connected to the broader constellation of progressive causes like promoting labor unions and being anti-market. It’s a travesty and a shame. To fight climate change, we need cheap solar panels and the Biden administration just unnecessarily made them more expensive. Environmentalists should be furious about that!
If climate change is as enormous a threat as progressives say it is (and I think it is in fact a huge challenge) then allowing climate policy to be held hostage by organized labor, left-nationalism, and an anti-capitalist ethos is a catastrophic, unforced error by progressives.