Wednesday, March 7, 2012

U.S. Solar Industry Divided Over Trade Action Against China

As the American solar industry readies itself for a possible trade war with China, factions of the divided industry are battling among themselves.
JA Solar employees clean a solar module at the
JA Solar production facility

Some argue that China is killing American solar manufacturers by illegally dumping cheap solar panels on the U.S. market, while others fear that tariffs against China would curtail solar adoption here and provoke a wider trade war with China.

The battle began last fall when the American arm of SolarWorld, a German company that makes solar cells and panels in Oregon, filed a trade complaint on behalf of American solar manufacturers. SolarWorld argued that Chinese solar companies benefit from enormous government subsidies and are illegally "dumping" solar cells in the United States, driving American companies out of business.

"Artificially low-priced solar products from China are crippling the domestic industry," said Gordon Brinser, president of SolarWorld Industries America, in a letter after the complaint was filed. "As the strongest and most experienced U.S. producer, SolarWorld is leading the effort to hold China accountable to world trade law."

SolarWorld filed the trade complaint on behalf of seven solar companies that it said "sustain thousands of U.S. jobs, directly and indirectly, and manufacture solar cells and panels in the United States." The group of companies, which wanted duties applied to Chinese solar products to level the playing field, is known as the Coalition for American Solar Manufacturing, or CASM, but SolarWorld is the only company publicly identified.

The group's action is highly unpopular with many other players in the solar industry who worry that duties would lead to higher solar prices for consumers, a loss of solar installation jobs and retaliation by China. They say falling solar prices have been critical to expanding solar adoption worldwide and reducing the use of fossil fuel.

"Everyone I've spoken to in the solar industry is upset about what SolarWorld is doing," said Ramesh Misra, a solar energy analyst at Brigantine Advisors, which researches the technology sector.

Opponents of the trade complaint have formed the Coalition for Affordable Solar Energy, or CASE, that includes fast-growing Bay Area startups like SolarCity, SunRun and Sungevity. Many of these companies question who SolarWorld really represents, besides itself.

"Normally an entire industry files a trade case, not one company," said Jigar Shah, a solar industry veteran and president of CASE, who worries that SolarWorld is "single-handedly trying to start a trade war."

The U.S. Department of Commerce is investigating the allegations of illegal subsidies and dumping by China. A ruling on subsidies is expected to be announced March 5, while the ruling on dumping is expected later that month. Subsidies and dumping -- selling products for less than the cost of production -- are illegal only if they result in "injury," which SolarWorld is attempting to prove before the International Trade Commission.

The solar dispute arrives as California Gov. Jerry Brown welcomes Xi Jinping, Vice President of the People's Republic of China, to Los Angeles on Thursday.

President Barack Obama recently announced a new trade enforcement unit to investigate unfair trade practices, and presidential candidate Mitt Romney has taken a hard line against China in the hotly contested Republican primary campaign.

"It's not fair when foreign manufacturers have a leg up on ours only because they're heavily subsidized," said Obama during his State of the Union address last month. "I will not stand by when our competitors don't play by the rules."

When Fremont solar maker Solyndra filed for bankruptcy this fall, Department of Energy officials cited fierce competition from Chinese manufacturers as a major factor.

SolarWorld is optimistic that the Commerce Department will rule in its favor, and notes that several members of Congress, including Sen. Ron Wyden, D-Ore., and Bay Area Democratic Congressional members Jackie Speier, Barbara Lee and Pete Stark have signed a letter urging Obama to quickly investigate the allegations of unfair trade practices.

"This is a legal proceeding, not a political one," said Tim Brightbill, an international trade attorney for Whiley Rein, SolarWorld's law firm. "But we were encouraged to see the president talk about renewable energy, trade enforcement and China so prominently in his State of the Union address, and we know that we have strong support from members of Congress as well."

Opponents of punitive action against China are urging Obama to negotiate directly with China, and this week the CEOs of 45 American solar companies wrote a letter to Obama about the matter.

"We believe that you and Vice President Xi have a unique opportunity to avoid such a trade war and find agreement that benefits the solar industries in both countries," the letter said.

SolarWorld makes both solar cells and panels and has about 1,100 employees in the United States. The company used to manufacture in Camarillo but shuttered the California plant last year and moved to a new facility in Oregon, which offered SolarWorld millions of dollars in tax credits.

SolarWorld's trade claim specifically refers to silicon-based photovoltaic panels, so leading American manufacturer First Solar, which uses thin-film technology, is not directly affected. First Solar has not signed on with either solar group, but the Arizona-based company has sought to distance itself from SolarWorld's petition.

"We are a global firm, and in our experience the industry and our customers benefit most when trade is free and fair and all participants operate on a level playing field," said Ted Meyer, vice president of corporate communications. "That supports a sustainable market for affordable solar power."

Other key players have also tried to stay above the fray. San Jose-based SunPower (SPWRA), which manufactures most of its silicon-based solar panels in the Philippines, is not involved with the dispute and claims to be "neutral." The Solar Energy Industries Association, the national trade association of the U.S. solar energy industry, has not publicly taken a position, even though the stakes are high.


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