The Obama administration likes to promote renewable energy, and it likes to take a tough stance on trade with China. It may soon find that it can't do both.
Solar energy firms, in fact, say a recent Commerce Department trade ruling will eliminate thousands of the green jobs that President Barack Obama likes to talk about.
The department made a preliminary decision last month to impose a 31 percent tariff on solar panels imported from China. The punitive levy was sought by SolarWorld, a German company that makes solar panels in the U.S. and six other companies.
More than 700 other firms, organized as the Coalition for Affordable Solar Energy, opposed the tariff. The opponents, which include manufacturers, installers and others involved in the solar industry, argue that the tariff will make solar energy less affordable.
Dane Glueck, president of StraightUp Solar in Overland, is a member of the coalition. He's in favor of having solar panels made in the U.S., but he fears that a big price increase would hurt his installation business.
“It's a complex issue,” Glueck says. “The biggest risk is if it drives the cost up too high, everybody across the board is not selling as much and not installing as much.”
A much bigger local company, MEMC Electronic Materials of O'Fallon, Mo., is also a coalition member. MEMC is both a manufacture of polysilicon, a raw material used in solar panels, and a major developer of solar projects through its SunEdison subsidiary. On May 17, the day the anti-dumping levy was announced, MEMC's share price fell 22 percent.
Unfortunately, U.S. trade law doesn't give upstream and downstream firms any standing in cases like this. The only questions are whether the foreign producers are guilty of dumping, and whether the firms bringing the complaint were injured.
In cases involving China, the definition of dumping is arbitrary. Opponents of the tariffs say that Chinese solar panels actually cost more in the U.S. than they do in China, but because China is considered a non-market economy, the Commerce Department constructs an artificial market price.
“It's not dumping as the common person would think of it, but by the standards of the law, it is,” says Gary Hufbauer, senior fellow at the Peterson Institute for International Economics in Washington. “This is a law that's written to favor the petitioners.”
It's not even clear, however, whether firms like SolarWorld will see much benefit. The Chinese manufacturers can avoid the tariff simply by shifting their solar-cell manufacturing to other countries, such as Taiwan and South Korea.
If that's the case, the Chinese firms' solar panels will be only slightly more expensive than they are now, and they will continue to gain market share. In the meantime, the U.S. will have angered an important trading partner: China has called the tariffs unfair and says it is “extremely dissatisfied.”
Some analysts think China will retaliate, threatening a relationship that is advantageous to many U.S. firms. The Coalition for Affordable Solar Energy says the U.S. has a $2 billion trade surplus in solar products, including a $200 million net surplus with China.
Solar installation costs have fallen by 75 percent in the past four years, creating jobs in the solar industry and giving momentum to a power source that doesn't produce any greenhouse gases. This unfortunate trade ruling threatens to turn a win-win situation into a lose-lose one, all in the name of punishing China.
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| Joshua Hill, a communications techinician with StraightUp Solar, makes adjustments during the installation Thursday, Jan. 5, 2012, of solar panels on the roof of a building in Overland occupied by THF Realty. |
Solar energy firms, in fact, say a recent Commerce Department trade ruling will eliminate thousands of the green jobs that President Barack Obama likes to talk about.
The department made a preliminary decision last month to impose a 31 percent tariff on solar panels imported from China. The punitive levy was sought by SolarWorld, a German company that makes solar panels in the U.S. and six other companies.
More than 700 other firms, organized as the Coalition for Affordable Solar Energy, opposed the tariff. The opponents, which include manufacturers, installers and others involved in the solar industry, argue that the tariff will make solar energy less affordable.
Dane Glueck, president of StraightUp Solar in Overland, is a member of the coalition. He's in favor of having solar panels made in the U.S., but he fears that a big price increase would hurt his installation business.
“It's a complex issue,” Glueck says. “The biggest risk is if it drives the cost up too high, everybody across the board is not selling as much and not installing as much.”
A much bigger local company, MEMC Electronic Materials of O'Fallon, Mo., is also a coalition member. MEMC is both a manufacture of polysilicon, a raw material used in solar panels, and a major developer of solar projects through its SunEdison subsidiary. On May 17, the day the anti-dumping levy was announced, MEMC's share price fell 22 percent.
Unfortunately, U.S. trade law doesn't give upstream and downstream firms any standing in cases like this. The only questions are whether the foreign producers are guilty of dumping, and whether the firms bringing the complaint were injured.
In cases involving China, the definition of dumping is arbitrary. Opponents of the tariffs say that Chinese solar panels actually cost more in the U.S. than they do in China, but because China is considered a non-market economy, the Commerce Department constructs an artificial market price.
“It's not dumping as the common person would think of it, but by the standards of the law, it is,” says Gary Hufbauer, senior fellow at the Peterson Institute for International Economics in Washington. “This is a law that's written to favor the petitioners.”
It's not even clear, however, whether firms like SolarWorld will see much benefit. The Chinese manufacturers can avoid the tariff simply by shifting their solar-cell manufacturing to other countries, such as Taiwan and South Korea.
If that's the case, the Chinese firms' solar panels will be only slightly more expensive than they are now, and they will continue to gain market share. In the meantime, the U.S. will have angered an important trading partner: China has called the tariffs unfair and says it is “extremely dissatisfied.”
Some analysts think China will retaliate, threatening a relationship that is advantageous to many U.S. firms. The Coalition for Affordable Solar Energy says the U.S. has a $2 billion trade surplus in solar products, including a $200 million net surplus with China.
Solar installation costs have fallen by 75 percent in the past four years, creating jobs in the solar industry and giving momentum to a power source that doesn't produce any greenhouse gases. This unfortunate trade ruling threatens to turn a win-win situation into a lose-lose one, all in the name of punishing China.
Read More
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