Thursday, October 20, 2011

Will US Regulators See the Light? US Solar Panel Manufacturers Seek Protection From Unfair China Trade Policies

Today I noticed this article during my daily scan of the news:

In short, seven domestic solar panel manufacturers filed a trade case with the Commerce Department accusing China of subsidizing its own panel manufacturers to an unfair degree. In some cases the subsidies are enough to allow Chinese panel producers to sell at prices that would normally incur a loss. The clear long term strategy is to give Chinese panels a huge price advantage long enough to put all their competitors out of business. This is not just conjecture. The practice is already well documented in the rare earth metal industry where the Chinese control an estimated 95% of production and can now set prices because they have a monopoly. Rare earth metals are important in a variety of industries, especially electronics such as cell phones. They are also used in catalytic converters on automobiles and in the magnets found in wind turbines.

To remedy the situation the complaint is asking the Treasury department to impose a 100% tariff on imports of Chinese panels. The idea of a tariff is appealing because in addition to removing unfair competition from China it has the added bonus of generating revenue which the government sorely needs right now.

One point the article makes is that if tariffs are imposed the cost of solar panels in this country will go up. This is true. One budget neutral way to address this would be to eliminate all subsidies for the oil, coal and gas companies. These large corporations are doing fine on their own, making billions in profits in recent years. Subsidizing energy from these unsustainable sources just fattens the profits for these companies at taxpayer expense. Theoretically they also make these sources cheaper, artificially widening the gap between the price for renewable vs. unsustainable fossil fuel sources.

Instead the money should be used to offer rebates to homes and businesses who choose to install US made panels, helping offset the the fact that panels made here cost a bit more. As US production grows it should be possible to achieve the economies of scale that are the other reason why Chinese panels are cheaper.

1 comment:

  1. I tried to connect this site to my yahoo account but for whatever reason, it wouldn't work, so I just bookmarked it. Anyway - thanks for your words and thoughts, it was interesting reading and thoughtful.