A Green Degree Blog: New Angles On Sustainability

May 19th 2012

Is The US Handling A Double-Edged Sword With Their Hefty Import Tariffs On Chinese Solar?

So the other day I posted a blog surrounding this whole mess we’re calling the ‘solar trade war’, of which the US and China are the key players, and of which I finished by saying would benefit nobody and, if anything, seriously hurt the solar industry at a crucial (this can’t be understated) moment in its growth.

At this point in time, solar as a form of energy, a very nice one at that, is rapidly approaching grid parity with fossil fuels, and in many instances is able to compete on par for energy prices to both consumer and producer, with the big coal and oil lobbies. That is one impressive feat considering relatively little government subsidies have been involved (that’s relative to fossil fuels) and massive growth has occurred in just 5-10 years, not decades.

However, this lack of comparative funding and phenomenal growth clearly doesn’t sit very well with the US and the Department of Commerce, who severely oppose the Chinese solar market and it’s doings, which have undeniably been a key driving force in this event.

Very briefly, the Chinese government has been found ‘illegally’ subsidising their solar industry and key companies, such as SunTech, by selling them for below-market prices, effectively flooding the global solar market with cheap panels. The US has branded this anticompetitive and blamed it for the crash in US-solar sales and Solyndra’s collapse, responding by slapping a small, but nonetheless important 2-4% trade import tariff on Chinese solar. That was then.

Now it seems they’ve upped the ante, with the Department of Commerce raising tariffs to 31% for the major Chinese solar companies, and as high as 250% (!!) on smaller firms, effectively forcing the Chinese to raise their prices to meet ‘market’ levels, i.e. the US’, despite their ability to produce at such cheap and effective prices. I find this to be sheer madness (some may say blatant protectionism) by the Department, who could easily be accused of crippling the solar industry at a time when just one more nudge in the right way could lead to an explosion in sunlight-derived energy.

It may be true that the Chinese have been unfairly aiding their solar markets, but the fact of the matter is this; the US is doing exactly the same, and as I say in my earlier post, SolarWorld reaps rewards far beyond those of SunTech, and yet we leave them alone entirely. Not only this, but why should cheap solar panels, in abundance around the world, which are no doubt forcing prices down hugely and cleaning up the atmosphere, be subject to these crazy tariffs just because the US feels its own domestic manufacturers are at risk?

Chinese Solar Tariffs Hide Some Unfortunate Truths

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First of all, I just want to say a quick apology for the distinct lack of posts in the past 3 days, a detour from my usual every other day/daily posts. Basically, university work is to blame for it; dissertation has finally been handed in but two more exams sit lurking in front of me, so I’ll likely be taking a bit of a downtime between each post, but do not worry (if you even read this blog, I love you if you do), I’ll be back on form and free in two weeks time.

Now that that’s out of the way, onto the subject of todays post - those pesky Chinese and the apparent trade war between their solar capacity and the US. I wrote a blog on this relatively recently detailing why the Chinese were being scorned for their solar trade practice, and why even back then I felt it was a bad idea for everyone involved.

I’ll quickly recap just to jog my own and any reader’s memories.

The US found out that the Chinese government had been quite heavily subsidising their solar industry, namely SunTech, in a move to make their solar panels cheaper to make, easier to ship and to effectively flood the global market. As the US doesn’t like competition they see as unfair, they set about placing tariffs on the Chinese market to the tune of as much as 4.3%, to alleviate the apparently anti-trade practices.

When I initially blogged about this, I, and I’m sure many others thought that the whole thing was a mess, and entirely unnecessary in the grand scheme of things. Chinese solar is good, and theres nothing we can do about it. If they can manage to flood the market with quality solar panels at cheap prices and in abundant amounts, why should the US stifle this growth in place of its more expensive types? Surely as long as the world is getting solar, from multiple other countries aside from the US and China, everyone is a winner? Well that was my thinking at the time at least.

Now it has been revealed that, the night before the tariff decision was made on Monday, the American organisation, the Coalition for Affordable Solar Energy (CASE), has called for all seven members of the Coalition for American Solar Manufacturing (CASM) to release their own books on the subsidies, tax breaks and government help they have received in their time. This is a truly inspired move, with the president of CASE, Jigar Shah, highlighting how the original Chinese-US tariff war demanded clarity on Chinese solar, and yet there was no clarity with US-owned companies. By ordering the release of such information, the true story unravelled quickly.

Solar Experiences The Bad & The Good - Graphene, Prices & Chinese Tariffs

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The past week has been a bit of roller-coaster for the solar industry, with some rather large ups and a potentially even larger down. As it stands, solar is either teetering on the edge of a steep cliff, ready to drop into possible failure and public outcry, or it may be just months away from its crowning moment.

First on the agenda, I’ll get the bad out of the way, leave you folks with the nice sciencey stuff last.

China has been causing a stir in the solar panel market for the past couple of months, with some of its largest companies, such as the infamous Suntech, being accused of accepting rather lucrative and un-competititve subsidies through the Chinese government, allowing the company to make panels at low low prices and flood the international market without much stress on their part.

Obviously, the US jumped straight in to defend their maturing solar industry and the vested interests of First Solar, its largest manufacturer of panels, on the grounds that this unfair marketing was taking sales away from America and skewing the market towards Asia. This story blew up in size as more countries came to see the issues of both sides, and China came under scrutiny over the subsidies and tax-breaks, of which they of course denied, stating they were fair and within trade law.

Since then, I’d heard little until this week, when the US decided to impose trade tariffs on Chinese solar manufacturers, to the tune of between 2.9% and 4.73%. These figures were in all honesty a relief to many thinking that much higher rates would be decided, crippling the Chinese industry in the long-term. This is an admittedly depressing setback at a time when solar needs all the momentum it can get to smash through the fossil fuel lobbies and slap itself on every roof it can, and is based on purely US-centric economic stances to do with ‘flooding the market’. In my opinion, and I’m sure many agree (?) that it doesn’t matter where the solar panels come from, as long as global kWh prices are falling and interest increasing, which are far as I know, generally are.