With the unanimous 6-0 decision by the U.S. International Trade Commission December 2 enabling a thorough probe of claims that Chinese solar panel manufacturers are ‘dumping’ their products in the U.S. market at below the cost of making and marketing them, an all-out trade war looms. Without long-term, innovative thinking by both sides, the ultimate loser is bound to be the U.S. consumer and maybe the U.S. economy. The question is by how much.
One also is compelled to ask: how is this good for cleaner energy in America and workable trade relations between the world’s two most dominant economic powers?
The shift of manufacturing prowess in solar panels and its components to China is tracking the shift in computer and other high-tech industries. Unless SolarWorld and its unidentified allies that comprise the Coalition for American Solar Manufacturing (CASM) in this dispute come up with more than the fairness and legal case, the market-based facts currently tilt in favor of the overriding jobs and related arguments made by the Coalition for Affordable Solar Energy (CASE).
I’ve seen first-hand the earnest desire of individuals, communities and businesses to buy only solar panels at least assembled in America. (Keep in mind many components are made outside the U.S.) Many of these buyers are willing to shoulder the added costs of such purchases. But the cost-differential is getting more difficult to justify each month. And that differential could grow if this solar panel trade dispute spins out of anybody’s control.
Look at China’s recent decision to further subsidize renewable energy. The National Development and Reform Commission there said November 30 that the government would increase the feed-in tariff / surcharge on power to 0.008 yuan per kilowatt hour (kwh) from 0.004 yuan per kwh, effective December 1, 2011, according to Reuters. With China aiming to increase the proportion of non-fossil fuels to 15 percent of the total energy mix by 2020, similar moves could be forthcoming in 2012.
Add to that the possibility of a knee-jerk reaction by China to these solar panel dumping claims and we have the makings of an all-out trade war.
China’s Ministry of Commerce said in a statement Dec. 3 “the ruling was made without sufficient evidence showing U.S. solar panel industry has been harmed.” The Ministry added, according to Bloomberg Business Week, that the ruling was made “regardless of defense opinions from Chinese firms, as well as opposition from the U.S. domestic industries and other stakeholders which prominently shows the U.S.’s strong inclination to trade protectionism and for which China is deeply concerned.”
Meanwhile, U.S. policymakers refuse to tax carbon, or other harmful emissions, (TheEnergyFix, May 7, 2011). Congress punted on legislative options to cap carbon emissions and allow polluters the ability to trade emission credits; it won’t even seriously consider a national clean energy or renewable portfolio standard. The mere thought of a feed-in tariff by a municipality or a state is virtual heresy with notable exceptions in Vermont, Hawaii and Gainesville, Florida.
Granted herding 50 states, much less the partisan bickering that dominates Congress, is no comparison to the single-mindedness of the single-party, Communist government in China. But that’s the reality that cannot be ignored. If policy makers turn a blind-eye to a market-based solution, cleaner energy in America and the jobs that are scaling up renewable energy are likely to suffer in the short run and possibly in the long-run.
Look for possible insights at the annual “Phase II” of Renewable Energy in America National Policy Forum in Washington this Wednesday, December 7, organized by the American Council On Renewable Energy (ACORE). A partnership of ACORE and U.S. – China renewable energy interests is focused on “increasing understanding of the U.S. and Chinese renewable energy markets and fostering public and private sector partnerships between the two countries.” How could it help resolve this solar panel dispute? Might it help broker a deal?
SolarWorld president Gordon Brinser said the ITC rulings “further erodes the credibility of denials by Chinese manufacturers and their importer allies in this case.” Read the entire CASM statement here.
CASE co-founder and SunEdison founder Jigar Shah called on the Obama Administration to step in on behalf of “the entire American solar workforce” and balance the “need for affordable solar energy.” More from the CASE coalition on the dispute is here.
The next step in the case could come as early as January 12, 2012 when the U.S. Department of Commerce weighs in on preliminary remedies and any circumstances it considers “critical”. It could require importers to deposit estimated duties on imports dating back to October 14, 2011. A preliminary anti-dumping duty determination could come by around March 22, 2012.
Chinese solar manufacturers are considering shifting production to other countries to avoid tariffs that may result from a trade complaint, according to various reports, including this dispatch from Bloomberg Business Week.