Clean Power

Published on November 24th, 2011 | by Susan Kraemer


China-US Solar Trade War Has Complex Arguments

November 24th, 2011 by  

As a homeowner who has benefited from cheap solar panels from China, I am torn by the recent moves here to slap a tariff on Chinese solar imports, because of course green jobs here will help the US economy, and normally I lean towards buying local and keeping jobs here at home. (And only if we develop a constituency for clean energy to match that for dirty energy will we get the political support for clean energy that is essential for the long term future of civilization.)

But. Cheap solar now – currently made in China – already has the potential for benefits that go far beyond jobs today.

On the one hand, we should all be thankful that at least one nation is investing bigtime in producing carbonfree energy, as the Chinese government is, now. The world will have a safer climate future because of the intelligence of the current Chinese government. That that heavy subsidizing of solar results in cheaper solar around the world truly is a benefit to humanity: see China Won’t Ape US on Carbon: Disastrous.

We need solar to get to grid parity, and what the Chinese government is doing will do more to get it there than anything our  now completely dysfunctional government could do in the foreseeable future: it can barely keep the lights on in congress.

On the other hand, like many Californians, I am also the past beneficiary of the local green jobs boom in the 33% renewable by 2020 state, having easily securing the sort of job in solar that would be hard to come by in other industries. I know first hand how much the US needs a nationwide green “gold rush” of new jobs in solar domestically like this.

Of course, on one hand: cheap Chinese solar means China benefits economically from its solar policy of government support and protection. We don’t. (But we could. We could supply our own government support, as we did with nuclear, oil, and coal.)

On the other hand, the US itself also earns money from exporting polysilicon, the raw material from which PV solar panels are made, as Renewable Energy World’s Steve Leone points out in an excellent piece on the complexity of this issue. More Chinese solar panels result in more US jobs, at least in raw material exports. (What an irony that a developed nation like the US is now a raw material supplier to what was only recently a developing nation.)

China has become the world leader in highly automated cell and module production. But it’s leading manufacturer, China’s Suntech sources half its polysilicon from outside China, and 30% of that comes from the US.

And China sees the world as a level playing field of intertwined green energy destinies, and feels threatened by US solar competition. Suntech – which has a manufacturing plant in Arizona – sees price competition from the US as well, and from thin film manufacturers like First Solar, not just polysilicon-based solar competitors.

“We’re in a hyper competitive environment,” Andrew Beebe, Chief Commercial Officer for Suntech, told Leone. “The cost leader here is a US company, First Solar. It’s not due to one country or another; it’s due to the extraordinary rush of companies that has taken place over the last couple of years, and it’s led to an oversupply of capacity. It’s been a great time to be a customer of solar, but the inevitable ramification of that is not everyone is going to make it.”

Adding to the intertwined fates of China and the US on solar trade policy is the fact that one of the factors in China’s success in cutting solar pricing is partly due to US policy. The Obama administration had set a goal to reduce solar prices to $1 a watt by 2014, invested in the DOE programs of subsidies and incentives needed to achieve it, and is on track to get to that goal.

(Related: “Clean Energy Push Rivals Manhattan Project”: WSJ)

But Obama policy led in turn to the the Chinese government increasing investment in its own solar plants to supply the targets (along with meeting the EU targets – as well meeting its own much more demanding renewable policies: see China Even Beats US to Cap and Trade.) China is good at mass production on the scale needed to make things cheaper globally. China has invested billions in solar loans and cossets its manufacturers with support that the US can only dream of.

So, on the one hand, the US just cannot compete with China on price.

On the other hand, the tragic losses of the price war have resulted in some incredible deals for homeowners. US solar manufacturer Evergreen, which recently went bankrupt trying to compete in this price war is now auctioning off its assets in a liquidation sale that led to some incredible deals in solar panels for a lucky few in the US, at just 54 cents a watt. Some homeowners will be the lucky beneficiaries of that liquidation – and the climate will benefit.

The many stakes in this new trade war on solar are complicated. I’m sure you can add yet more layers to this complex argument on both sides.


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About the Author

writes at CleanTechnica, CSP-Today and Renewable Energy World.  She has also been published at Wind Energy Update, Solar Plaza, Earthtechling PV-Insider , and GreenProphet, Ecoseed, NRDC OnEarth, MatterNetwork, Celsius, EnergyNow, and Scientific American. As a former serial entrepreneur in product design, Susan brings an innovator's perspective on inventing a carbon-constrained civilization: If necessity is the mother of invention, solving climate change is the mother of all necessities! As a lover of history and sci-fi, she enjoys chronicling the strange future we are creating in these interesting times.    Follow Susan on Twitter @dotcommodity.

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  • Brad Norrad

    So, how much does China contribute to you ? I sense that there is some hipocracy here. China is one of the worlds big polluters. One cannot breathe in the green air of Beijing in summer. Their main
    source of hydro power is from coal and they are building coal fired generation to keep up with their growth. You remind me of David Suziki, who defends China as a non-polluter while being funded by the Chinese in a big way and all the while having a bigger carbon footprint than Al Gore. And the Chinese are known for flooding the markets with cheap products, undervalued by huge subsidies.
    In additon they have no regulations on production standards, including food. And they keep their currency deliberately low rather than let it float on the world market like all other WTO members.
    They are crooks of the worst kind. They cannot be trusted in any venue. If they allowed their currency to float, stopped the huge subsidies, they would not be able to compete and the manufacturing would return to North America.

    • While I agree that China has enormous pollution problems, (unrelated to solar, mostly) it is wrong that their “main source of hydro power is from coal”. These are two different forms of energy, one clean – one dirty.

      Hydro-electric power is generated by water in rivers simply rushing though turbines, unaided by coal. Hydro power is a renewable form of energy, unlike coal.

      But China, while it now leads the world in hydro power, as a developing country with regard to hydro (about equivalent to the US a century ago) has made some gigantic mistakes in how it went in to that too, with some of the worst environmental damage in the world. Another complex mess of good and bad!

    • Anonymous

      on top of Susan’s reply, i’ll just add that China doesn’t contribute ANYTHING to us. And we don;t benefit in any clear way from point out China’s clean energy leadership.

    • Anonymous

      This appears to be the latest numbers for total CO2 emissions. The top seven…

      China 7711 million metric tons

      US 5425 million metric tons

      India 1602 million metric tons

      Russia 1572 million metric tons

      Japan 1098 million metric tons

      Germany 766 million metric tons

      South Korea 528 million metric tons

      Canada 541 million tons
      Here’s the same group of countries based on CO2 per capita…

      United States 17.3 metric tons

      Canada 15.7 metric tons

      Russia 11.0 metric tons

      South Korea 10.9 metric tons

      Germany 9.3 metric tons

      Japan 8.9 metric tons

      China 5.7 metric tons

      India 1.3 metric tons

      You seem to have a lot of China hate bubbling around, but when it comes
      down to it China is not releasing much CO2 per person. Additionally they
      are doing a lot of the manufacturing of products which are consumed in the
      US and that lowers US levels. We’ve outsourced a lot of our CO2 to China
      and other countries.

      China is now installing solar and wind more aggressively than is the US.
      Not on a per capita basis, but they’re gaining there as well.

      China is opening coal plants but what is mostly happening is that they are
      replacing around 7,000 dirty coal plants that they shut a couple of years
      ago with modern, efficient coal plants. If one takes a look at their
      energy plans it appears that they feel that they have to use coal in the
      short run (as Germany is now doing) but their intention (like Germany’s) is
      to end up with a clean grid.

      China is beginning to tighten regulations and to clean up their industry.
      And to clean up their urban air. China has just implemented a major
      program to put as many drivers as possible into EV rather than liquid fuel
      vehicles. And China has opted for electrified high speed rail rather than
      air travel.

      China is undervaluing their currency, but they have announced that they do
      not intend to do so on a permanent basis. It’s a little hard to fault
      China for being self-centered in their attempt to pull a billion people out
      of poverty in a short period of time.

      Labor prices are rising in China and we are starting to see some
      manufacturing returning to the US. Right now we can be competitive with
      products which have low labor inputs and are bulky/expensive to ship. As
      oil prices rise and Chinese standards of living rise we will find that we
      can compete in more and more areas. Chinese wages will rise and Chinese
      citizens will be an enormous new market which will likely suck up most of
      what China can produce.

      And, no, I do not receive any funding from China….

      • Anonymous

        That’s the best piece on China I think I’ve ever read. 😀 Well done.

        • Anonymous

          Let me add, China has some things that need improvement. Their human rights, citizen control over government, and freedom of speech suck graded by developed nation standards.

          But the discussion is about energy issues and it looks to me that China is taking renewable energy more seriously than most western/developed countries.

          The United States should be the very last country to complain about China’s CO2 emissions. China is charging forward with renewables and EVs. We’re letting dunderheads block our way.

  • Anonymous

    Wonderful post, Susan! Thanks for this 😀

    It is a complex case, but I think you really nail it here.

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