Solar Trade Dispute: What Is the U.S. Thinking?

As if it was not bad enough that European states are clawing back on the solar feed-in tariff subsidy rates, the U.S. is moving towards artificially increasing prices of solar panels by putting taxes on imported solar PV panels. I will explain that even more starkly: While Europe is still subsidizing solar PV panels; the U.S. is going to tax them!

The U.S. International Trade Commission has, according to RenewableEnergyWorld.com, “unanimously determined that Chinese solar panel and cell imports are harming the American solar manufacturing industry.” This, it seems, is a precursor of import duties being levied on solar panels imported from China. To add an ironic twist, some U.S.-based solar companies themselves are promoting this policy. They argue that China is “dumping” lots of solar panels on the U.S. market and putting them out of business. 

Essentially, Chinese manufacturers are selling their panels at cheaper prices. Partly this is a case of the Chinese having the foresight to invest in green industries, and this is also part of a normal business cycle when periodically supply exceeds demand, as opposed to demand exceeding supply, which pushes prices up. 

However, if the solar industry is effectively arguing that prices must be increased with protectionism, it is contradicting its ultimate goal to drive down global prices for renewable energy technologies. The U.S. position is also sacrificing solar technology progress for protectionist purposes. This comes at a time when trade policies should be as internationalist as possible to avoid the selfish nationalism of the 1930s – which caused much destruction. If the allegedly idealistic renewable energy industries cannot hold the line on this, who can?

As far as I can see, the main U.S. case seems claim that the Chinese are putting barriers in front of imports of U.S. solar panels. It is debatable that Chinese barriers are worse than U.S. barriers for renewable energy, given, for example, the availability of incentives like the production tax credit for U.S.-based rather than non-U.S.-based companies.

At best, the U.S. was justified in taking its argument to the WTO, as the issue is certainly not for unilateral action, such as setting import tariffs on solar panels that would likely adduce retaliation. At worst, this is sheer hypocrisy. The West (including the U.S.) generally subsidizes its own industries in various implicit, and often quite obvious, ways (as in the case of agriculture) to allow its products to be well and truly “dumped” on developing nations.

We often hear disparaging noises from the U.S. (even from some solar companies) about European feed-in tariff policies. Well, parts of Europe are developing large capacities of solar PV, led by Germany, that stand in contrast to the sluggish progress in the States. U.S. policies seem not only to fail to encourage solar expansion, but actually to halt it by increasing prices for solar power through restrictive trade tariffs and policies.

This issue exposes the sad truth that leadership in the renewable energy industries has increasingly little to do with the U.S.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s