Solar Trade War Officially Starts Today

SolarWorld is announcing a trade action against foreign solar manufacturers, alleging that “illegal activities” have caused “job cuts, losses in shipments and harm in operating margins.”

Eric Wesoff October 19, 2011

Eric Wesoff

Editor-at-Large
Greentech Media

Eric Wesoff is Editor-at-Large at Greentech Media. Prior to joining GTM, Eric Wesoff founded Sage Marketing Partners in 2000 to provide sales and marketing-consulting services to venture-capital firms and their portfolio companies in the alternative energy and telecommunications sectors. Mr. Wesoff has become a well-known, respected authority and speaker in these fields.

His expertise covers solar power, fuel cells, biofuels and advanced batteries. His strengths are in market research and analysis, business development and due diligence for investors. He frequently consults for energy startups and Silicon Valley's premier venture capitalists.

SolarWorld, a German firm with some manufacturing facilities in the U.S., has fired the opening salvo in a U.S - China trade war.

SolarWorld is holding a press conference today in Washington D.C. as a member of the newly-formed Coalition for American Solar Manufacturing (CASM). That organization will be announcing a trade action against foreign manufacturers -- alleging that "illegal activities" have caused "job cuts, losses in shipments and harm in operating margins." The allegations from CASM also say that, "The surge in foreign solar cells imports has resulted in the elimination of thousands of jobs in Arizona, California, Massachusetts, Maryland, New York and Pennsylvania."

Senator Ron Wyden (D-OR) and Senator Jeff Merkley (D-OR) will also be speaking at the press conference. SolarWorld's manufacturing facility is located in the home state of the two senators.

Wyden's office has published a piece called "China's Grab for Green Jobs" (downloadable here) which includes this passage.

China has worked to achieve these goals by providing a myriad of subsidies to its solar technology producers. These subsidies encourage the production and export of solar cells and modules – the primary components of solar panels – and support their sale at below market prices, making it possible for Chinese companies to stay ahead of their foreign competitors. The Office of the United States Trade Representative uncovered evidence of the Chinese government’s efforts to subsidize its green energy industries and notified the World Trade Organization (WTO) on October 6, 2011. Under its WTO obligations, China is supposed to notify the body of its subsidy programs, but frequently fails to fulfill this important obligation.

It's easy politics to make these types of claims. One could also uncover subsidies that SolarWorld has received to locate their facilities in the state of Oregon. What about Chinese companies like Suntech which build product in the United States and meet the Buy American Act? What about American companies subsidized by states and the DOE? It's a nuanced topic, but those nuances seem to be lost on the Democratic Senators making these claims.

Andrew Beebe, the CCO, at Suntech said, "American companies are not driving this effort because American companies know that these types of complaints are job killers in the U.S."

The two prominent American solar companies, First Solar and SunPower have not joined the coalition.

Arno Harris, the founder of Recurrent Energy, a solar developer now owned by Japan's Sharp, recently wrote on this topic in a post published in National Geographic's Great Energy Challenge. Here are some excerpts from Harris' piece, reprinted with permission.

A handful of struggling solar manufacturers are expected to announce they are joining a petition to the International Trade Commission and the US Department of Commerce (DOC). The petition is expected to allege China unfairly subsidizes solar manufacturers and is ‘dumping’ solar modules on the global market below cost (a view exacerbated by a few high profile solar company bankruptcies I previously wrote about).

A successful petition would be the first step towards imposing tariffs on solar panels imported from China. The announcement is timed to coincide with the start of Solar Power International, the US’s largest solar trade fair taking place next week in Dallas.

Let’s state plainly what’s going on here. A group of manufacturers who can’t compete with today’s solar panel prices are seeking to erect trade barriers to make the US a ‘safe market’ for their own more expensive solar panels. They want to prevent Americans from getting access to low-cost solar panels and low-cost solar electricity so they can sell their own more costly product to them instead.

This is clearly a tactic in the narrow self-interest of the manufacturers joining the petition. It’s not in the interest of American consumers. It’s not in the interest of ratepayers. It’s not in the interest of our national security. And it’s certainly not in the interest of slowing global climate change.

I’ve said it many times, but it’s worth saying again. The best thing we can do is encourage the solar industry to ruthlessly drive down the cost of solar panels. And that’s exactly what the industry has been doing with manufacturing in the US, Europe, China, Malaysia, the Philippines, and beyond.