Why Biden’s China tariffs are more bark than bite

Good morning and welcome back to Energy Source, coming to you from New York.

President Joe Biden reinstated Trump-era tariffs on double-sided solar panels this morning as the president moves to protect US clean energy manufacturers and boost jobs ahead of the November election. The announcement comes as US solar panel imports have surged to record highs amid a global supply glut that has depressed prices and threatened domestic manufacturing plans.

The solar duties follow a round of tariffs from the White House on Chinese goods, including electric vehicles, batteries and solar cells, earlier this week. In today’s newsletter, we put these tariffs on Chinese clean tech under the microscope. Then we look at how a second Trump administration could alter forecasts for fossil fuel demand and the deployment of renewables.

Thanks for reading,

Amanda

Biden’s China tariffs: more bark than bite

On Tuesday, Biden announced sweeping new US tariffs on Chinese imports, including higher duties on solar cells and batteries and a 100 per cent tariff on Chinese electric vehicles.

Philosophically, the move represents the competing priorities facing the Biden administration as it vies to rapidly deploy clean energy while cutting China out of its supply chain. The announcement was a signal to some experts that the White House was prioritising the latter.

“What we’re seeing here is this incredible tension at the middle of the energy transition between one view, which is let’s get the cheapest, the least expensive stuff deployed as quickly as possible . . . And the other view is let’s do this in a way that generates American jobs with American flags on them and benefits the United States,” said David Victor, a Brookings Institution fellow and professor at University of California, San Diego. “What’s happening is basically the second view is winning.”

Clean energy advocates, China hawks and car and manufacturing industry lobbyists cheered the move. Scott Paul, head of the Alliance for American Manufacturing, called the tariffs “the first and biggest step in defending our domestic EV industry”.

However, practically speaking, the new tariffs are more bark than bite. While a 100 per cent tariff on Chinese EVs is high, the US hardly imports any electric cars from China. Where the pain will be felt is in critical minerals and batteries.

Regular Energy Source readers will know the White House has already imposed tough restrictions on Chinese sourcing for EVs. The Inflation Reduction Act’s tax credit for EVs is only available for cars that source their batteries and critical minerals from the US or trade partners — excluding China.

But the new tariffs were “a political reminder for companies unsure of using the domestic EV battery subsidy that the political direction of travel is towards greater restrictions on Chinese products”, said Milo McBride, a fellow at the Carnegie Endowment for International Peace.

Battery storage developers will feel the most pain. The US market has been reliant on cheap imports from China as its domestic manufacturing sector expands. Recognising this dependency, the White House granted the sector a two-year window before the tariffs kick in.

Eric Dresselhuys, chief executive of ESS, a US battery storage manufacturer, told Energy Source that the tariffs “sent the right message” but would only partially make up for the plummet in battery storage prices. The phase-in period before battery storage tariffs hit in 2026 also left the door open for Chinese products at a time when the US domestic industry was taking off, Dresselhuys said.

On the solar side, the US has imposed tariffs for more than a decade on Chinese panels and imports the vast majority of these from south-east Asia. The new tariffs should have little effect on the US solar market, where low prices for imported panels have been a boon for developers but made it difficult for domestic manufacturers to compete. It’s unclear how much today’s round of tariffs will narrow the gap on pricing.

“While it’s a good thing for some kind of accountability with China, in terms of actually addressing the market issues at play, it won’t do much,” said one large manufacturer. “If you’re only enforcing trade laws from China to the United States, you’re missing a whole entire part of the market that is creating the real problem.”

How another Trump administration could reshape energy outlooks

Over the weekend, former president Donald Trump promised to stop US offshore wind projects on “day one” and “immediately terminate” Biden’s tailpipe emissions rule if re-elected in November.

“There will be no ban on gas powered cars and gas trucks in the Garden State. There will be no ban anywhere in the United States of America on gas,” Trump said to thousands of cheering supporters at a rally in Wildwood, New Jersey.

The comments offered the latest glimpse into Trump’s plan to undo Biden’s clean energy reforms if he returns to the White House. How much this rhetoric will manifest into serious policy has been a guessing game among energy folks as they try to party-proof their projects with less than six months to the election.

A new forecast from consultancy Wood Mackenzie this morning models how another Trump administration would reshape the outlook for fossil fuel demand and the pace of emissions reductions.

The report assumes rollbacks to the Environmental Protection Agency’s standards for methane emissions, tailpipe emissions and power plant pollution. It also expects cuts to the Department of Energy’s Loan Programs Office, expedited permitting for liquefied natural gas projects, slower timelines for offshore wind and broad tax cuts that would lower the capacity to fund renewable energy tax credits through the IRA. Wood Mackenzie considers a full repeal of the IRA unlikely.

The result: 683mn tonnes of additional carbon dioxide emissions from the energy sector and a $322bn reduction in anticipated capital investment in clean energy by 2030. While Wood Mackenzie assumes fossil fuel demand will peak by 2030 in its base case, a reduction in policy support for clean energy could push that peak back by 10 years.

“This is a scenario where we’re still expecting an energy transition, it’s just at a much slower pace than the world would want in terms of climate targets,” said David Brown, director of Wood Mackenzie’s energy transition practice.

Higher oil demand in this slower transition scenario would be supported by a slower adoption of EVs. The consultancy predicts that a weakening of the tailpipe emissions rules could lead to carmakers investing more in hybrids, resulting in a 50 per cent reduction in the total stock of EVs by 2030 compared with their base case scenario.

Wood Mackenzie assumes IRA renewable energy tax credits will continue to exist. But cuts to government funding for low-carbon energy projects, continued long queues to connect to the grid and lack of permitting reform will result in a 24 per cent slower deployment of wind and solar by 2030 compared with their base case, leaving room for gas to play a bigger role.

On the trade front, Wood Mackenzie expects hawkish policies against Chinese clean tech sourcing to continue, including Tuesday’s tariffs.

“Tariff policy is going to continue and could worsen. The momentum is really in that direction,” Brown said.

Job moves

• Vineeta Maguire will succeed Murray Elliott as chief executive of Energy Safety Canada, the country’s oil and gas safety association.

• EIG’s LNG company MidOcean Energy appointed Armand Lumens as chief financial officer, succeeding Benjamin Vinocour. Lumens previously served as CFO of Neptune Energy.

• Chris Cox will join Serica Energy, a British upstream oil and gas producer, as chief executive starting in July. Cox has led numerous energy companies including Spirit Energy and most recently Curium Resources. David Latin will step down as interim chief following Cox’s appointment. 

• Maha Energy has appointed Roberto Marchiori as chief financial officer of the upstream producer, succeeding Guilherme Guidolin de Campos.

• The US Federal Energy Regulatory Commission named Nicole Sitaraman as director of the public participation office. Sitaraman has served as acting director since March 2023, succeeding Elin Katz.

• Southern Company has elected Peter Sena as head of the utility’s nuclear division, following Stephen Kuczynski’s retirement at the end of June. 

• Sasol has appointed Timothy John Cumming as non-executive director of the South African chemicals company. Cumming is the chair of DRDGOLD, a South African gold producer. 

Power Points

Energy Source is written and edited by Jamie Smyth, Myles McCormick, Amanda Chu and Tom Wilson, with support from the FT’s global team of reporters. Reach us at energy.source@ft.com and follow us on X at @FTEnergy. Catch up on past editions of the newsletter here.