U.S. Solar Firms Debate China Solar Subsidies
Is unfair competition from China driving U.S. solar manufacturers out of business? In a preliminary decision Friday, the International Trade Commission found that Chinese imports are hurting the U.S. solar industry. But U.S. solar companies are far from united in their positions about whether that’s really true.
On one side stands solar-panel manufacturer SolarWorld, along with six other solar-equipment makers who together form the Coalition for American Solar Manufacturing, or CASM. In October, the group, led by SolarWorld, filed complaints against China’s solar industry with the U.S. Department of Commerce and the ITC.
The companies allege that Chinese manufacturers are illegally “dumping” solar products into the U.S. market, or selling panels below cost in order to put international competitors out of business. They claim that the tactic could reduce competition and eventually lead to a Chinese monopoly on solar.
Dumping, combined with more than $30 billion in Chinese government subsidies, have already cost nearly 2,000 U.S. jobs, according to CASM. A tariff to counteract Chinese companies’ unfair advantage could help to level the playing field, the coalition says.
“We feel this is the first step in restoring sustainable international competition that has been derailed by China’s predatory aggression these last couple of years,” said Ben Santarris, head of corporate communications at SolarWorld. “It’s decades of healthy international competition that have driven production costs and prices down to a level that many, if not most, Americans can afford, and we need to [get back to that].”
A second coalition, made up of 132 companies and called the Coalition for Affordable Solar Energy, represents the other side of the argument. It claims that global competition from China and elsewhere has played a key role in lowering solar costs, and says a tariff would decrease, not increase, international competition.
The CASE coalition calls the CASM lawsuit “anti-trade,” and says that “protectionist” action could increase solar prices, shrinking the U.S. market and costing the U.S. industry billions of dollars and thousands of jobs. “The irony of this lawsuit is that, after years in which the criticism of solar was that it was too expensive, we are now achieving rate reductions and moving toward grid parity,” said Kevin Lapidus, senior vice president of legal and governmental affairs at SunEdison. “We want to reduce solar prices; that’s how we’re going to grow. This lawsuit [could] push the solar industry back years.”
CASE argues that a tariff could start a trade war if other countries, including China, retaliate with similar tariffs on U.S. goods. That could hurt the U.S. solar industry, which exported $5.6 billion worth of goods in 2010 — $1.9 billion more than it imported – with net exports of $300 million to $400 million to China, Lapidus claims.
For the most part, it appears that solar companies’ positions largely depend on where they stand in the supply chain. Solar-panel manufacturers have been squeezed by the lower panel prices amid all the competition from China, leading to layoffs and factory closures, and a tariff on Chinese panels could help ease their pain. Meanwhile, downstream players – such as distributors, developers and installers – have profited from the lower cost of buying panels and have been able to grow their market and, in some cases, their margins as a result. A tariff on lower-priced panels could increase their costs and cut into their margins or their sales.
What It Means for Consumers
Of course, consumers and employees have a stake in the outcome too. Adam Browning, executive director of solar advocacy group Vote Solar, said that consumers benefit from the low prices that the competition from Chinese companies have brought to the market. Low prices have expanded the market for photovoltaics, leading to larger-scale projects, he added. “A tremendous amount of the market is actually only possible [with low prices],” he said. “We need to continue to focus on the long-term goal of bringing down cost.”
However, Santarris contends that Chinese importers, not consumers, have been enjoying the bulk of the benefits. “The collapse in pricing over the last year … has benefited some companies, but has not benefited the end users by anywhere near the amount that it has hurt manufacturers,” he said. “In the last year or so, wholesale prices have fallen by 40-50 percent, generally speaking, but prices to consumers haven’t fallen any more than they usually do in a one-year interval. So somebody in the middle is enjoying a windfall.”
Both coalitions say that jobs are at risk, as well. Roughly a dozen domestic manufacturers already have laid off workers, shut down plants or gone bankrupt, Santarris said, and virtually all manufacturers – including Chinese companies – have reported losses. “The heavily subsidized, state-sponsored solar manufacturers in China are attempting to put all competitors in the West out of business while they monopolize the marketplace. If China were unchecked, it would not be long before there were no domestic manufacturers left. If that happens, a lot more people will be out of jobs.”
Lapidus counters that manufacturing jobs make up only 14 percent of U.S. solar jobs, with only 2-3 percent coming from the type of large-scale manufacturing that could benefit from the lawsuit. Meanwhile, installation makes up 57 percent of the jobs, and sales and distribution account for 21 percent, according to CASE. Those businesses stand to lose from the lawsuit, the coalition claims.
“This is not U.S. vs. China, but 2-3% of the U.S. market ruining it for the other 97% of the U.S. market,” Lapidus said. Overall, solar jobs have been growing steadily, rising 6.8 percent last year to roughly 100,000 today, he added.
In any case, the ITC’s investigation will focus on whether the trade practices are illegal, not on the advantages or disadvantages to U.S. companies, Santarris said. “It’s a question of legal or illegal practices,” he said. “If cell phones fall off the back of a truck and some people benefit, that doesn’t make it right. If China is using illegal practices, as we contend, any benefits from those illegal practices are ill-gained.”
Without the government subsidies, he claims, Chinese manufacturers wouldn’t have a significant cost advantage, because the shipping costs offset the savings from cheap labor.
In the other camp, CASE hopes that the Obama administration will intervene to resolve the dispute and that the ITC and the U.S. Commerce Department ultimately will find no merit to the case, Lapidus said.
“The way the process is designed is there’s a lower legal standard for a quick preliminary decision and a higher standard for a final decision,” he said. “It’s our view that as people understand the details of the solar industry and how it works, they will have a very different perception of the merits and quality of SolarWorld’s case.”
The Commerce Department, which also is investigating the case, could deliver a preliminary ruling as early as Jan. 12, with a final decision expected toward the end of the year.
Headway Solar has an experienced team of PV Solar Power Plant Consultants in India.Apart from being Solar Power Plant consultants, we provide completerange ofSolar Products and Services. We are a young company and we strive toexcel in the best and latest technologies of the Solar Industry. Articles l Homepage
Search 26k+ Solar Articles
- New CPV Efficiency Record for Amonix
- Toyota Prius to be Replaced?
- Securitization and Renewable Energy
- The All-Electric Fiat 500e
- The Energy Supercomputer
- A Breakthrough or Just Another PV Module?
- Bloom Energy Sees Revenue Drop in Q1
- Catching Photosynthesis in the Act
- Top 5 Ways The U.S Military is Utililizing Renewable Energy
- New Solar Technology to Increase Efficiency
- The Rise Of The Green Machines
- Solar Savings: Tax Credits and Solar