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Why the Tariffs on Chinese Solar Panels are Bad for American Business

Jun 8, 2012

Two weeks ago, the U.S. Department of Commerce sent a clear message to the American renewable energy community: “We don’t support you.”

By levying tariffs ranging from 30-250 percent on all solar panels imported from China, the ruling will constrict the growth of renewable energy here in America; driving up the prices for installers, their customers, and, ultimately, the American taxpayer. The legislation threatens to kill the very blue-collar jobs it claims to save.

Last October, the U.S. subsidiary of the German company SolarWorld Industries filed a petition claiming that Chinese manufacturers were infiltrating the US market, “dumping” their panels at less than cost in a drive to put U.S. manufacturers out of business. Chinese government subsidies, SolarWorld claims, made it impossible to compete.

Meanwhile, U.S. manufacturer Solyndra, the beneficiary of a $535 million Department of Energy loan guarantee, continued its controversial Chapter 11 bankruptcy filing.  Perhaps this one example shows best how hypocritical this ruling is: the loan guarantee allowed Solyndra to receive loans at very low interest rates, despite it being a high risk, pre-revenue start-up.  At what rate could Solyndra have raised money from other sources?  Our calculations show that this “subsidy” was easily worth over $2 billion to Solyndra, and is just one of many similar “subsidies” provided right here within the U.S. 

The irony is that becoming the world’s leading solar manufacturer is not a role the U.S. should seek to fill. The market that SolarWorld and Solyndra were fighting for is one of razor-thin margins, increasing automation, and commoditization.  Meanwhile, companies like SolarCity, Sungevity, and Urban Green Energy are focusing on the actual implementation of solar and renewable energy technologies. In doing so, we are growing extremely fast and creating thousands of American jobs. These jobs, far outnumbering what would be created in manufacturing, cannot be outsourced. Further, our companies scale globally, bringing proven business models overseas and increasing the presence of American companies as leaders in the worldwide renewable energy industry.

If any more irony were needed, we can look to an email we received shortly after the tariff announcement from Conergy, a prominent U.S. supplier of renewable energy products. Conergy announced that in the wake of the Department of Commerce’s announcement that they would now be offering solar panels from Hyundai at “competitive pricing.”  Yes, that’s right — this tariff does nothing for U.S. manufacturers, it only moves business from China to Korea. 

For years, the world has berated China for unsustainable energy practices, and now, after investing millions to promote renewables, they are being punished directly for being too competitive.  Worst of all, in punishing Chinese companies, The Department of Commerce is punishing American companies as well.  Solar job growth in California was 166 percent from 2005 through 2010, despite the poor economy, and a recent report from LinkedIn showed that renewable energy continues to be one of the leading sources of job growth in the United States.  Meanwhile, the difficulties for solar panel manufacturers have been due to one reason: excess supply as demand hasn’t scaled up as fast as original expectations, often set by overzealous politicians.  In fact, Chinese suppliers are currently under great pressure as well — you can look at their stock prices to see how badly they are already suffering.

As a country we have a choice: Do we continue to compete as we have done so well throughout the last century, using innovation to become leaders in every industry?  Or do we turn inward and tell ourselves we can’t compete against outside forces, and put up trade barriers to protect ourselves against the outside world? Hey, it works for North Korea, right? The answer to sustainability lies not in escalating a trade war with China but in creating jobs and spurring innovation here in America.

Nick Blitterswyk, David Droz, Micah Steiger – Urban Green Energy

Nick, David and Micah work for Urban Green Energy, a renewable energy solutions company based in New York. Urban Green Energy designs distributed wind and solar energy systems for residential, commercial, and telecommunications facilities around the world.

Image: Taxes sign via Shutterstock

The information and views expressed in this blog post are solely those of the author and not necessarily those of RenewableEnergyWorld.com or the companies that advertise on this Web site and other publications. This blog was posted directly by the author and was not reviewed for accuracy, spelling or grammar.

Micah is a specialist in managing energy projects and business development in the United States, Latin America, and the Caribbean. Micah works for Urban Green Energy, the premier manufacturer of distributed vertical axis wind and solar energy systems for residential, commercial and telecommunicat...

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