The U.S. and China have been locked in a trade war over solar panels since 2012, and residential solar power company GCI Solar says a continued trade spat will only hurt advancements in solar energy – an important renewable resource.
The U.S. first placed tariffs on solar panels imported from China in 2012, ranging from 24 to 36 percent. The goal was to level the playing field for solar panel manufacturers in other countries, as China began dominating the market.
“The trade case stemmed from a legal filing [in 2011] by a coalition of manufacturers, led by SolarWorld, a German company with considerable manufacturing in the United States,” The New York Times reports. “The coalition contended that Chinese companies, which dominate global sales with a two-thirds market share, were competing unfairly in the American market.”
Additionally, Chinese solar companies received subsidies from the Chinese government, allowing them to sell products well below market value in the United States, which The New York Times refers to as “dumping.”
For a while, the tariffs were a good solution to China’s solar dominance. Lawyer Timothy C. Brightbill, who represented the companies who brought the trade case against China in 2012, tells The New York Times, “This is another important step in returning the solar marketplace in the United Stats to fair competition.”
“The Chinese module manufacturers had been found guilty of ‘anti-dumping’ trade violations by the U.S. government, thus each of the Chinese module manufacturers will be imposed a tariff that increases its pricing to be more realistic to that of the current U.S. competitors’ pricing,” experts at GCI Solar explain. “Thus far, it has actually stabilized the pricing for all solar modules and brought price continuity to the solar industry.”
However, continued tensions between the U.S. and China threaten the solar industry and the 140,000 jobs it has created in the U.S.
“It’s not that China is cutting off the supply of cheap panels,” Will Oremus, senior technology writer for Slate, says. “It’s that the United States is threatening to slap new tariffs on them that could sharply drive up the price.”
It’s the availability of cheap solar panels from China that have sustained the solar industry boom in the U.S., says Oremus. If prices go up even higher, GCI Solar says it could cause the industry to stagnate, as consumers won’t be able to afford the cost of panels. Part of the attraction of solar energy is that it saves money on energy costs and is inexpensive to install.
Oremus explains how the trade dispute breaks down: “The U.S. government wants Americans to buy solar panels, and it subsidizes those purchases through rebates and incentives,” he writes. “The Chinese government wants Chinese companies to build solar panels, and it subsidizes their manufacture. And yet rather than celebrate this fortuitous arrangement, the world’s top economic powers find themselves on the brink of a trade war that could cripple a promising industry in both countries, kill jobs, and hurt the environment all at once.”
There’s no doubt that Chinese manufacturing has helped consumers and hurt U.S. manufacturers. “When China began the rapid expansion of its solar industry several years ago, many in the global industry expected further technological breakthroughs would result in additional cost reductions,” The New York Times reports. “But Chinese companies have driven costs down mainly through greater economies of scale from building ever-larger factories to produce conventional solar panels.”
Good for consumers, says GCI Solar, but bad for producers. The New York Times says that nearly a dozen solar panel makers in the U.S. went bankrupt between 2011 and 2012. Meanwhile, installation companies like GCI Solar saw higher demand because of cheaper panels.
Some groups, like the Solar Energy Industries Association (SEIA), have tried to find creative solutions that benefit both U.S. manufacturers and installment companies like GCI Solar with affordable solar panels that are made in the U.S.
“The problem we have right now is that the trading rules are not working well,” SEIA vice president John Smirnow tells Bloomberg. “Solar has a very complex global supply chain.” Penalizing countries involved in that chain with excessive tariffs doesn’t help anyone. The SEIA proposes abolishing the tariffs on Chinese-made solar cells, along with China’s tariffs on polysilicon made in the U.S. – both components needed in solar panel production. “Instead, China’s solar energy companies would establish a fund in the U.S. that American solar cell manufacturers could draw from to help them ‘scale-up,’” Bloomberg reports.
Still, no compromises have been reached yet, and the U.S. plans to increase existing tariffs on Chinese solar cells.
Advancing solar energy is more important than a trade spat between nations, GCI Solar says, and they hope to see a logical resolution soon to continue the expansion of affordable renewable energy sources.
Rebekah Henson Plourde contributed to this article.