Don’t allow trade barriers against Chinese solar panels to undermine solar power businesses in the United States

Feb 27th, 2012 | By | Category: Articles, Featured Posts

Contra Costa Times editorial:

In its zeal to promote solar energy in this country, the Obama administration is considering a policy that threatens to be counterproductive to the U.S. solar industry and to overall trade with China. At issue is China’s manufacture of solar cells and solar panels at costs that are well below those of American solar panel manufacturers. The American arm of SolarWorld, a German firm that makes solar cells and panels in Oregon, filed a trade complaint, arguing that Chinese solar companies are unfairly and illegally benefiting from huge subsidies and dumping solar cells in the United States. Dumping is predatory pricing, which occurs when manufacturers export a product to another country at a price either below the price charged in its home market, or in quantities that cannot be explained through normal market competition.

 

It remains to be seen if China is dumping solar cells and panels in the United States. If so, it must be addressed in a manner that does not start a trade war. It also has yet to be determined if China’s subsidies are any more substantial than those U.S. firms have received, including the hundreds of millions that went to Solyndra in Fremont before it went bankrupt. SolarWorld also benefits from subsidies such as the $10 million it received in tax credits from Oregon. More important for the long-range health of the solar industry in the United States is for the administration to fully understand that manufacturing of solar cells and panels is not likely to ever be a major part of the solar business in this country.

The bulk of the solar industry in the United States is the development of solar power systems and installation. Without low-cost solar panels, firms such as the Bay Area’s SolarCity, SunRun and Sungevity would face a bleak future. If the United States were to place heavy tariffs on solar cells and panels made in China, the price of those products could rise to the point where solar power systems would not be marketable in this country. Also, placing trade barriers against a product that accounted for $3.1 billion in trade with China in 2011 threatens to snowball into a full-blown trade war that would hurt both nations. Besides, Chinese companies could move production to other countries that also have low labor costs, such as South Korea or Vietnam.

We understand and support the Obama administration’s efforts to promote solar energy in the United States and to combat truly illegal trade practices. At the same time, it is critically important that tariffs and other trade barriers not be used in an attempt to save companies such as Solyndra or SolarWorld, which concentrate on manufacturing, rather than installation or research and development of solar products. We also urge candidates of either party not to simplistically politicize what is essentially a complex economic issue.

Solar power can best grow in the United States and worldwide if low-cost panels are available. A trade policy that results in higher costs for basic solar elements would threaten a promising development of a renewable source of energy and must be avoided.

Contra Costa Times editorial
© Copyright 2011, Bay Area News Group

Posted:   03/20/2012 04:00:00 PM PDT

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