Obama to China: We Need Your Solar Panels, but They're Too Cheap

President Barack Obama stopped by a Nevada solar facility Wednesday to promote his administration's renewable energy efforts -- just a day after the Commerce Department said it would slap tariffs on Chinese imports of solar panels.

One has to look no further than Obama's State of the Union speech to understand the move. Obama is mad as hell about China subsidizing its manufacturers, and he's not going to take it anymore. It's an issue that makes for excellent politics, combining support for U.S. jobs, American manufacturing and clean energy with opposition to the rise of China.

Unfortunately, the administration's approach may hamper the development of clean energy in the U.S. and unnecessarily complicate U.S.-China relations in the process.

It's no secret that when China makes products, it often sells them more cheaply than its competitors. The price differential stems from low Chinese wages, lax regulation and hefty government subsidies. The U.S. solar market has borne the brunt of China's aggressive efforts, with solar panel costs tumbling 80 percent in the past five years. The failures of Solyndra LLC and Evergreen Solar Inc. illustrate the toll falling prices have taken on solar-panel makers.

That's triggered calls from some in the solar industry for the U.S. to intervene, and the Commerce Department on Monday set duties of as much as 4.73 percent on solar products from China. The administration must decide in May whether to levy duties based on additional allegations that Chinese firms are underpricing solar panels to thwart competitors.

Everyone wants a level playing field. But the administration has to tread carefully or risk undercutting an industry it wants to promote. People use fossil fuels because they are cheaper and more readily available. Clean energy, such as wind and solar, will never be able to compete as long as fossil fuels retain a price advantage. Getting renewable energies like solar and wind to become more reliable and more cost-effective will require innovation, which shouldn’t be restricted to U.S. shores.

More than 100 solar companies are opposing the administration's move, in part because they fear it will drive up solar costs and impede a fledgling industry: They buy solar products from China.

The administration seems cognizant of this concern given how low it set the duties. Industry analysts say the levies will barely make a dent in China's advantage. Such a move seems more political than practical, which may not be the best approach for relations with a country the U.S. is inextricably linked to.

SOURCE http://www.bloomberg.com/news/2012-03-22/obama-to-china-we-need-your-solar-panels-but-they-re-too-cheap.html