Made in Japan, Made in China, Made in Korea -- Is Solar the Car Industry's Act Two?

We believe that the best way for America to get out of this mess is by becoming the world’s leader in renewable energy, green products and jobs.  This agenda is mantra for President Obama and his platform.  Here’s a fly in that ointment, however, and it won’t surprise you where it comes from – China.

It seems that the Chinese government is subsidizing its leading producers of photovoltaic solar panels so they can sell here for less than American-made panels.  Chinese firms such as Suntech Power Holdings are opening offices and production facilities on American soil to avoid tariffs, similar to what the Japanese car companies did over the past 40 years with great success.  Journalist Keith Bradsher of The New York Times unearthed plenty of examples of this plan in his recent article.  

So, how do we reconcile this situation?  How can we stop the Chinese government from helping its solar industry lower prices?  Do we really want to? Ultimately, isn’t this good for American consumers because it will make solar panels more affordable?  Isn’t it good for the environment because it will enable more homeowners to install solar systems? 

The answer is yes -- and no.  As the costs of photovoltaic panels come down, federal and local subsidies for homeowners installing solar systems are being reduced.  These reductions in tax credits are increasingly more aggressive than the reduced cost of panels.  Thus the consumer will not be able to readily enjoy the money-saving benefits offered by cheaper Chinese panels.

Furthermore, the technology and manufacturing source of photovoltaic panels is not of great concern to many homeowners.  They hire a local electrical or solar contractor to design and install their home solar system.  They evaluate the total cost of the system, including tax breaks, on a net-net basis.  Thus the customer for the cheaper Chinese panels is really the electrical and solar contractors.  They will probably be more than happy to buy the Chinese products if it enables them to make better margins, while still offering a competitively priced system to their homeowner customers.

I see one way to solve this while encouraging Americans to use American-made photovoltaic panels for their home systems:  let’s see more stimulus money trickle down to help our own solar producers compete with the Chinese.  If that means more subsidies so be it.  Or, how about giving consumers additional tax breaks or a feed-in tariff system for specifying to their contractors that they want American-made panels?   

I am not in favor of protectionism, and I do generally support free markets.  However, these are not ordinary times, and it is mission critical that America be the worldwide leader in renewable energy and green jobs.  If a relatively small portion of that stimulus package money is needed to make this a reality, so be it.  The United States has a grandstand opportunity to renew its global leadership role through green technology.  Thomas Friedman reminds us of the unique opportunity that lies before the U.S. in the following video.  

Now it is up to us to act.   If this isn’t motivational enough, picture the contrary, 20 years down the road, our economy is hanging in balance as we trail China in global manufacturing  and now renewable energy -- it isn’t pretty, is it? 

Contact your U.S. Congressman as well as local legislators to let them know your feelings. 

Follow Jennifer Schwab on Twitter: www.twitter.com/SCGreen_Home

Comments

[AverageJoe-1]

Protectionism does exist to a certain degree because under Obama Stimulus Plan had language in regards to the BAA (Buy American Act) for goods used on projects with such funding. The only exception to the BAA Clause is if it violates the TAA (Trade Agreement Act). Last I checked, mainland China does not qualify as a country of designation under TAA for such projects unless the Contract Officer states that an alternative product is not available or viable.

The problem is not of 'protectionism', China, etc. but our country and lack of a coherent policy.

[vegasgrl]

Maybe I'm missing something, or just don't know much about this, but....if I were to buy photovoltaic panels for my home I would probably consider the upfront price before the "local and federal subsidies". I would rather not wait 50 years for my efforts to save energy to pay for themselves.

[research]

with 5% financing a good sunny roof, you can immediately cut your cash out the door 30%.
See my profile.

[PJangles]

I'm all for renewable energy, and yah, sure it would be nice if we were the leader in green products and jobs etc. but why is it such an ugly picture if we're not? We're not the only country aware of the climate change problem, and isn't it great that we're actually NOT the only one doing something about it?

[elitt]

I truly enjoy Jennifer's insight and passion about the environment. Here's a link for other readers, who feel the same, to learn more: http://www.sierraclubgreenhome.com/

[Guitarsandmore]

It's too late for us to be the world leader in renewable energy products and it just doesn't matter anyway it is not important.

What is important is that we:

A) fight climate change by installing solar panels and wind generators everywhere (doesn't matter where they were built).

b) Become energy independent so that we can not be held hostage by countries that hate us.

C) Stop sending dollars to countries that finance international terrorism.

None of these very important issues require that we "lead" in developing the technology. The technology is already here and everyone knows how to make it. Denmark, Germany, and others have been making it for 30 years. It is too late for us to lead the way but it is also not important. It is only important that we become green.

[AverageJoe-1]

I had already posted already below but check out the web page of:

http://www.DSIRE.org.

It is a web page listing local, state, and federal incentives and tax credits / rebates for renewable and energy-efficient upgrades as well as of private (utility) incentives.

Another good source is to learn of EPACT 2005 and of how it will help provide tax credit of up to $1.80 per sq ft. for a comprehensive retrofitting that leads to energy-savings. For example, if an owner will invest to reduce lighting needs by 50% (as per EPACT 2005 regulations), then the owner qualifies for up to $0.60 per sq ft. tax credit as well as of utility incentives to finance the project.

Some utilities will even provide very low interest rate loans (for businesses) to become energy-efficient. Most utilities will provide incentives / rebates to help finance the cost differrential for the energy-efficient products.

[FreedomCorpse]

The banter going back and forth about free markets and protectionism is basically a red herring. China has actually financed the trade deficit by buying junk debt (mixed with some good debt) wjo;e industry has fled there to exploit workers and economic differences (and non-existent or barely existent environmental regulation). Additionally China has pegged their currency to keep it cheap relative to the dollar to maintain the massive trade deficit and inflow of industry to their country.

However, it is all bad karma for the US and for China as we can all see what it has done, American workers are scrued, blued and tattooed and the Chinese economy will never be autonomous without radical increases in the wages paid there so their workers can actually buy whatever they make without depending on exporting it. The exporting industries are subsidized by the chinese government as well so the 'free markets' meme is all nonsense. We have to build things to prosper and make our own underwear or we'll all be wearing diapers when we realized how hosed everything is by following morons like Freidman's theories. No one man, Freidman nor Keynes had a monopoly on sound economic theory, no one on wall street acknowledges people like Von Mises austrian economics for a reason...they can't exploit the people and governments as easily as the other 'theories'.

[BridgeCrewe]

I, like Jennifer agree and disagree, but I think the bottom line should be saving the planet. If we're available to get solar panels at a lower price from a Chinese company, then that will be that. The planet should come before the country. Would it be nice for American countries to produce the panels at the best price? Absolutely, but I agree and have written that the best way for the economy to get back, would be through green jobs and lifestyle changes. This can be the start.

[research]

Maybe we should stop letting the fossils industry write policy?

Why are we proposing giving Coal50B$?

Why are we proposing creating the largest new derivative market in history? And giving away half the credits to the fossil polluters???

Why aren't we massively investing in NanoSolar and First Solar, two American companies that are very competitive world wide, in fact they lead.

Public finance all elections, outlaw all contributions and the Bribery they are.

rooftop PV is the cheapest electricity source available: 3 cents per KWH.

Let match China's investment in our own solar companies. everybody wins.

[AverageJoe-1]

The 'new derivative' market is a mechanics established as a process of offfset credits and to place a market value for such reduction in GRH emissions. If I am not mistaken, the KYOTO PROTOCOL had an establishment of such to assist in the process.

Some states such as CA are in the process of creating or working with the Climate Registry to work on such exchanges for businesses to do become compliant. It was established to assist / compensate the participants because once a company or facility is validated, an annual-audit most occur for the next four years at a cost (of course) to validate continuation of the implementation.

[tonkatsu]

"I am not in favor of protectionism, and I do generally support free markets. "

The Constitution specifies several responsibilities of the US Congress:

Section 8. The Congress shall have power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States; ...
To regulate commerce with foreign nations, ...
To promote the progress of science and useful arts, ...
To make all laws which shall be necessary and proper for carrying into execution the foregoing powers, and all other powers vested by this Constitution in the government of the United States, or in any department or officer thereof.

These provisions of the constitution appear to make it clear that the Founding Fathers DID Favor protectionism to such an extent that they wrote it into the Constitution and made it the responsibility of Congress to enforce it to promote the "general welfare of the United States"

In other words, "Free Trade" treaties are a Violation of Congress's Constitutional Responsibilities.

[BlackbirdHighway]

There is no such thing as a free market and never will be. It's a myth created by greedy people to use when they want to get there own way. Ever notice how people who talk up the free market will forget it compeltely wheneveer it suits them?

[HammerTimes]

You say "I am not in favor of protectionism, and I do generally support free markets." Obviously you do so when its convenient... what a joke!

[genebasler]

"...picture the contrary, 20 years down the road, our economy is hanging in balance as we trail China in global manufacturing and now renewable energy -- it isn’t pretty, is it? "

What isn't pretty about it, Ms. Schwab? What's wrong with US trailing China in both global manufacturing and renewable energy? You, who "generally support free markets": what's wrong with one competitor edging out another in the marketplace? Why should I write my congressman? Save us, O Great State! Protect our jobs from the Red Dragon! Who still resorts to this Bush-era logic anyway? If you say "so be it" one more time, then we may have to point out to you a few of the atrocities perpetrated in the name of similar, ends-justify-the-means logic.

If you put some effort to it, you could perhaps contradict yourself a little more. You're "not in favor of protectionism", but "these are not ordinary times"? Oh, so the same flawed logic that the neocons used to wage war on faceless brown people all over Central Asia now serves your purpose just peachily: desperate times call for desperate measures. How convenient.

And who says it's "mission critical that America be the worldwide leader in renewable energy and green jobs"? Why must it be US? Which do you care about most, that the environment be protected, or that The Great Empire of America be the one to do it?

I daresay it's mission critical that you rethink your mission.

[sheila]

please do a little research on the enormously toxic process China uses for solar panel production (including dumping deadly poison into schoolyards and agricultural fields in the middle of the night) before you act like all "free markets" are created equal. unless and until China has environmental, safety and labor laws in place to prevent the poisoning and exploitation of humans and our planet, the system is gamed and China is cheating. i can't support that any more than i can support the disgusting array of HUGE subsidies Big Energy gets here in the US.

what we need are clean processes that pay a living wage and to make up the "expense" on the energy-production side, not on the manufacturing side. simple, generous feed in tariffs (as are succeeding in over 40 more advanced countries) coupled with low-interest loan programs so that WE the people can own our own means of 50-200% of our energy consumption and be paid fairly for any excess power are CRITICAL to the whole chain.

We don't have to be "the leader," but we do have to insist that we not kill the planet in order to "save" it. China is completely wrong in that respect, as are Big Solar, Big Wind and Big Transmission. There is a clean, fair, democratic, harmless solution that is more efficient and reliable in privately owned rooftop solar with panels produced without poison or enslavement, we just need to insist on it.

[jennymae]

You bring up a good point. I have done quite a bit of reading about the inability for developing countries to dispose of toxic waste appropriately. This is a HUGE problem and much of the reason that developing countries do not have drinkable water. If this is occurring with these photovoltaic panels, then it is definitely not worth buying them to "save" the planet.

[elitt]

I consistently read Jennifer's blogs, and I also visit the Sierra Club Green Home website for the articles. There's a really good one on the toxicity of water in developing countries due to electronics, which I find to be quite relevant to your comment: http://www.sierraclubgreenhome.com/go-green/electronics/e-cycling/

[Indra]

The US dropped the solar ball a long time ago and is too fat to pick it back up. The US has lost the market permanently and the Chinese now own it. The best alternative is to build your own solar panel.

[AverageJoe-1]

The U.S. also dropped the ball on energy-efficient lighting, ballasts, drivers, components, materials, mechnaics, and process-control systems as well. Basically, we dropped the ball on those growth industries and subsequent job creations. I do not care if it is classified or called 'green' but it is future growth industries and markets that could have helped the U.S.

Just look at SSL or Induction lighting and where are the innovative players based from? China, Korea, Japan, etc. The same for most of the other building-envelope technologies as well....

Case in point, the conventional fluorescent lighting that everyone sees in the buildings are
old and tried...nothing big....except for the fact that a South Korean company has created, developed, and are marketing products that will last 3-4 X longer than existing products leading to a massive impact to the environment in terms of landfills and waste. Where were American companies in the development of such technology in its infancy? Where are they now?

[DuganS1]

"If Chinese workers had the rights to organize and collectively bargain the way that their developed-world counterparts do, wages and environmental standards would have to rise. "

And prices would rise, which in turn would hurt consumers and retail companies. If you hurt retail companies, they'd open up less stores (hurting construction and engineering companies, construction equipment manufacturers, contracting companies like roofers, plumbers, heating and cooling co's, electricians, and manufacturers of office furniture, flooring, and windows), close some stores (hurting transportation companies, as they wouldn't deliver the goods anymore, warehouse companies, and commercial REITs), and cut jobs.

[TakeSake]

Yes, it's much better for us to keep them in their place, toiling the live-long day to supply our whims, living on poisoned land and drinking poisoned water.

[sheila]

You should have a word with Carl Zichella, darlin', since he has done more to harm the rooftop solar revolution than Big Coal has. By constantly denigrating, downplaying, discouraging and preventing rooftop solar installations in the RETI process, he has marginalized the most important part of the global warming AND energy independence solution, thanks to an untenable allegiance to wilderness-killing Big Solar, Big Wind and Big Transmission profiteers like Chevron, Goldman Sachs, BP Oil, T. Boone Pickens and other Robber Baron energy mercenaries.

Sierra Club is in a position to enormously influence the future of energy production AND wilderness conservation, so I hope they will start, like you, advocating much more strongly for generous feed in tariffs so that regular American people can be fairly compensated for putting our money where your mouth is, advocating much more strongly for low-interest loan programs so we don't have to pre-pay 25 years worth of utility bills to do our bit to save the planet, and pushing back HARD against any projects that are not sited within the existing built environment.

Back in 2003, the DOE determined 100% of the US' electricity needs could easily and affordably be produced on EXISTING ROOFTOPS, using only 10% efficient PV. Time to take action to make this reality, and save the 50 million+ acres of wilderness on target for total destruction by Big (ahem) "Renewables."