by Kate Gordon
A simmering trade dispute between the U.S. and China will likely come to a head tomorrow when the U.S. Department of Commerce issues its determination on alleged trade violations by Chinese solar manufacturers. Surprisingly, the U.S. solar industry is not in agreement on the need to hold the Chinese accountable. It should be.
On one side are those who claim China has been illegally subsidizing and dumping its solar products in the U.S. market, forcing many American manufacturers into bankruptcy. These companies, mostly manufacturers of solar panels and related products, claim Chinese solar companies have benefited from government largesse in the form of free land and facilities, electricity and water, and low- or no-cost loans that keep prices for Chinese-made solar products artificially low. In addition, they claim these Chinese companies are illegally “dumping” their cheap solar panels into the American market, making it nearly impossible for U.S. manufacturers to compete.
On the other side are those, mostly solar installers, who have benefited from the ability to buy low-cost solar panels, which they claim has allowed them to do solar installations at a lower cost and therefore expand the use of solar power in America. This group of U.S. companies argues that U.S. manufacturers can’t compete with the Chinese when it comes to solar panel production, because the Chinese are simply more efficient and can do production at a lower cost. They also worry that pursuing a trade case will incite a “trade war” with China, which will erode their profit margins, slow U.S. industry growth across the value chain, and make it even harder for solar energy to compete with traditional fossil fuels.
Both sides have compelling arguments. So who’s right?
One way to answer that question is to say that we’ll find out who’s right when the Department of Commerce issues its findings. Commerce has already found that China is unfairly subsidizing its solar industry, and has imposed tariffs on Chinese solar manufacturers as a result. The upcoming decision, on whether China is also illegally dumping those panels into the U.S. market, may bring larger tariffs if China is found to be in violation of our mutually-agreed-upon, and heavily negotiated, trade agreements. The entire point of the trade enforcement regime is to figure out whether a country is in fact breaking the rules, and if so, to issue sanctions. It’s a system based on the rule of law, something we Americans hold dear, and for good reason.
But would a decision against China undermine America’s emerging solar energy industry? There is no question that solar energy faces an uphill battle in the U.S. The combination of century-old subsidies to fossil fuel companies and the lack of any real national commitment to renewable energy makes it difficult for emerging energy technologies to compete here. But that doesn’t mean that the United States needs cheap Chinese solar panels so badly that we should just roll over and let a foreign government break enforceable international trade rules. If Commerce finds that the Chinese government has acted illegally, then the Chinese government and the industry it is subsidizing should pay a price for that behavior.
Our faith in the rule of law is too important for us to abandon our international trade obligations in favor of cheap imported solar panels. So, too, is our need to support the U.S. manufacturing sector by protecting it from unlawful trade practices. Manufacturing is a crucial piece of the U.S. economy. Our ability to stay innovative and competitive in a time of intense global pressures relies on manufacturing companies, which contribute fully 70 percent of all the private research and development spending in America. And these companies are major job creators: a recent report by SEMI found that manufacturing jobs had the highest job multiplier of any segment of the American economy.
That’s why we should be supporting clean energy manufacturers in their efforts to compete with China, through programs like the Clean Energy Manufacturing Tax Credit program that President Obama recently urged Congress to extend, or through Senator Sherrod Brown’s “Security and Energy in Manufacturing Act,” rather than punishing them for trying to compete on a level playing field. Because that’s the crucial point: every American company should be able to compete on a level playing field in the international marketplace. That’s good for solar manufacturers in the current case, but it’s good for all American companies – and for our economy as a whole – in the long run.
Kate Gordon is vice president for energy policy at the Center for American Progress.
Related Posts:
- Commerce Department Announces Small Tariffs On Chinese Solar Panels
- 5 Myths and Realities About U.S.-China Solar Trade Competition: Our Nation Cannot Capitulate to China’s Solar Technology Ambitions
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Major public and private investments in photovoltaic technologies have the potential to provide terrific whole systems benefits for many years to come; for mitigating and adapting to accelerating climate change, fostering local and the national economies, generating substantial intellectual capital fostering human capital with advanced skills.
Optimally, the United States solar build-out should create a situation where demand far outstrips supply to ensure that domestic manufacture, business, etc. get what they need to prosper.
If China is willing to “donate” low-cost product — on top of this — it could easily be to our advantage using it to advance domestic infrastructure where locally produced product cannot meet the demand which, in a full-speed-ahead solar build-out environment, should and must be pervasive to both rapidly mitigate emissions and adapt to rapidly changing climate conditions as they arise.
A very well written article on this situation.
Can someone please explain how China’s support for solar with land and tax subsidies is any different than American support with cheap land and tax subsidies to the fossil industry? I would offer that both would be working directly against the the build out of segments of US solar as well as the general Green advancement of our Nation.
Along with that duality is the new law that corporations are “People” now and still polluting the commons with toxins! Acidifying the lakes, rivers, dirt, ground water and seas for free, with even tax subsidies, as you and I get fined for throwing a paper cup out the car window. In light of that, I would have to say that the USA has very little “respect for the rule of law” in the big picture. In addition, if you received $300 for each paper cup you throw out the window but only fined $100 each time you rarely got caught, what would you do? I bet you could even be creative in perpetuating your cash cow. i,e. Even so far as paying off a congressperson or 2 to fire cops or lower the fine.
The US should not penalize the Chinese for providing low-cost photovoltaics to the world — and keep in mind that it’s not only PV deployment in the US that benefits from low-cost Chinese PV panels, but deployment in the developing world as well, where cheap, mass-produced PV is bring electricity to some of the world’s poorest populations for the first time in their history.
Instead, the USA should do what the Chinese are doing — massively subsidize the manufacturing of PV.
Let the USA and China compete to see who can flood the world with the most PV.
And then the USA and China can complete to see who can flood the world with PV manufacturing technology, so that the capacity to mass-produce high efficiency, ultra-cheap PV becomes as widely proliferated as possible — especially in the developing world.
There may well be no such thing as a panacea, but cheap mass-produced PV is pretty darned close. Let’s get on with it.
Hear hear, I do believe that’s connecting the dots between climate and energy production.
Any word on where the money from current sanctions are going?
Amen.
I completely agree. The fuss over Chinese advances in cheap solar PV production is partly, I would say, another front in the anti-renewable Crusade by the fossil fuel interests, and part the anti-China jihad by the Western powers, scared rigid by China’s rise and the spectre of the end of 500 years of Western global dominance. Two core interests of the hard Right.
Why is the claim that China is “more efficent” get any traction? Lower cost, maybe, but that’s because they use ultrapolluting coal based electricty (no scrubber and not much particulate control) and de-facto slave labor to make them. Then add in no interest loans, $US 30 billion in grants and dumping to top it off.
The goal is to bankrupt all other PV produers, and thy re succeeding. Last year everybody went broke in the PV manufacturing biz. Obviously prices need to rise so that manufacturing can at least break even.
PV is still really expenive, especially if the site chosen for installation is not a desert locale. Only massive govt subsidies (same applies to nukes, wind, coal and gas) allow PV to be old for 2 to 5 cnts/kw-hr, which is the prevailing rate paid to generators in this country.
As for the jobs in PV manufacturing, they are mostly in the supply chain. But, no domestic manufacturing, no supply chain, and no domestic jobs in that biz.
The PV installers in the US have to grow a pair, and also get some economic patriotism. If PVs are not made in this country, we really don’t NEED them. You can make a ot more electricty for a lot lower real, unsubsidized cost/price with wind, tidal, geothrmal and biomass/biogas. PVs are mostly useful as a way to createjobs by recycling money from the electricty bills we pay.
No domestic manufacturing of them should also mean effectively zero subidies for them -especiallty the ITC and MACRS. If you want to live large on avoided taxes that lower and middle class people will eventually have to pay, then make them donestically.
DB
I am so pleased to read these comments. Isn’t subsidizing and flooding the world with solar exactly what every country should be doing at the speed of light, ME
ME — made the same observation in much more detail the very first thing this morning, but I’m still sitting in “moderation.” Oh well.
Agree with Secular Animist..it is not a sin
or China to subsidize PV.
In general these “free trade” agreements have little to do with trade or with freedom or anything else…they are a reflection of each country’s most powerful lobbies to force other countries to cry uncle and go along with them.
But for renewables, the sin is the US is subsidizing coal and other fossil fuels and subsidizing nuclear power and should stop that and should better subsidize renewables.
P.S. If China’s are still ‘too cheap’ then maybe work on better worker protection and better wages for workers in China…You know, make things better, everywhere, instead of the Race To The Bottom to make all countries have the worst conditions, which is what “free” (read: corporate-centered) trade is virtually always promoting?
If fossil fuel even payed 25% of their cost to the commons, green energy would be the least expensive energy out there, without a penny of subsidies, and even with a decent labor cost. Humanity would not be left holding the empty bag while the rich debauch their billions away and humanity looses the fight. That is the irony of it all. Stop profits from polluting the commons. It is a stone stupid foundation for an economy.
US industry has a long tradition of hiding behind tariffs and other forms of protection instead of being productive. Look at US steel industry. Every time it gets more protection, EU and other countries innovate. So, what is more important globally, having a growing solar industry or protecting US firms?
Yes, there are a lot of good points here.
It must not be a race to the bottom where the Chinese extreme poor — probably something over 3/4 billion make less than $2 per day — must still continue to sacrifice life, liberty, and happiness.
This must be a collaborative effort of the highest form and there’s plenty to eradicate poverty in the process. The developed world is just being really stupid.
There must rapidly evolve new definitions of affluence based on quality of life not ultimately worthless stuff. The current definition of affluence is deeply entrenched with the idea of waste and this idea must change.
And, the rule of law must be further refined and be more universal. Stuff like that.
Yes this sounds way too optimistic and idealistic and seems so difficult to accomplish; but, in many ways we’ve come very far from the last world war and we definitely have the means and the stuff to make this happen, it’s basically simple; for survival of the comfortable life as we know it can be, as we’ve achieved so far; and just have to be willing to share this with everyone; ultimately to make all lives better.
And, there have always been lots of people working for a better world, so this can really come naturally, in a way.
A solar panel shows an amazing thing. People can use it to turn sunlight into electricity. People may use solar panels to turn some of the sunlight that reaches their own place into their own electricity. Duh, solar panels are an amazing thing.