In his State of the Union address, President Obama proclaimed that he would not cede the solar industry to China through a lack of commitment. Unfair Chinese trading practices demand that he keep this pledge immediately or risk surrendering the industry to China.
The United States created the solar industry and its technological leadership ensured its development. Bell Labs' researchers invented the first silicon solar photovoltaic device in 1954 and government researchers furthered industrial development. Despite the 2009 recession, the U.S. government invested $7.1 billion in solar R&D, compared to $1.32 billion from the E.U., and nothing from the rest of the world, including China. Yet today, China accounts for three-fifths of the world's solar-panel production and exports 95 percent of its production, much of it to the United States.
Against this backdrop, an epic battle is now occurring. Seven U.S. manufacturing companies, the Coalition of American Solar Manufacturers (CASM), filed antidumping and countervailing duty complaints against China with the U.S. International Trade Commission (ITC) and Commerce Department. CASM has argued that imported, illegally subsidized Chinese solar cells and panels are destroying U.S. manufacturing jobs and injuring the U.S. industry. Almost immediately, Chinese exporters and some U.S.-based assemblers and installers challenged the U.S. manufacturers, arguing that reducing subsidized Chinese imports would reduce U.S. jobs, through higher consumer prices and dampened demand for solar panels. They have warned of a "trade war" and have telegraphed threats of retaliation. So far, preliminary rulings from the ITC and Commerce have favored the U.S. manufacturers.
A key issue in the case is the billions of dollars in subsidies that the Chinese government has provided its manufacturers. The Chinese government heavily subsidizes export-oriented solar production through low-cost capital, free utilities, energy and land. Chinese state-owned banks make large loans with flexible, if any, repayment dates, to increase companies' production capacities and scale economies. Our data show Chinese solar companies carry substantially more debt than U.S. companies. For 2011-2020, China's National Development and Reform Commission allocated about $792.6 billion in direct investments into solar production. China's Five-Year plan has acknowledged that this capital-intensive industry requires large upfront investments.
Domestically, the Chinese government favored Chinese companies. In 2010, China's Ministry of Finance chose Yingli to supply 70% of the modules for one project's first phase over foreign companies' bids. Yingli received $114 million in prepayments, or 35% of the total purchase price in advance as an instant rebate. To meet capital shortfalls, Yingli also obtained additional low-cost loans from at least seven other state-owned banks.
U.S. subsidies, on the other hand, focus on trade-neutral consumption. That is, U.S. consumers receive subsidies regardless of whether the solar panels they purchase are made in the United States or China. U.S. consumption subsidies give no preference to U.S. manufacturers, offering more consistent benefits to assemblers and installers. Finally, these subsidies are significantly smaller than Chinese subsidies.
Chinese subsidies have allowed Chinese manufacturers to sell below cost and begin a drive to push competitors out of business. Aggressive cost-cutting Chinese manufacturers have used substantial production subsidies to employ price competition against U.S companies. As a result, many U.S. solar companies have moved production to Asia or outsourced. The trend began with contracting out value-chain parts (e.g., conversion of polysilicon to wafers), expanded to outsourced module manufacturing for branded-cell manufacturers, and evolved to joint ventures that moved all upstream production offshore. Essentially, higher- value manufacturing is moving to China, while lower-value assembly and installation is staying in the U.S.
Unfortunately, the United States' commitment to solar energy may result in the loss of domestic higher-value productions' benefits. Technological innovations, which occur not just in labs but also on factory floors, constitute major reasons why solar-panel prices have fallen. By offshoring production, companies offshore innovations as well. Additionally, higher-value-adding manufacturing employees receive higher pay, and have substantially higher job-multiplier effects than lower-value-adding assemblers and installers. In short, if we allow the Chinese to drive the remaining U.S. manufacturers out of the market, we are offshoring the type of advanced, next generation manufacturing we should want to have here in the United States. Without U.S.-based competitors, Chinese solar companies would have no need to maintain low prices. Indeed, our research has shown that without generous government subsidies, many Chinese manufacturers would face bankruptcies, incentive enough to raise prices and to recapture lost profits after destroying the competition.
President Obama continued, "So we have a huge opportunity, at this moment, to bring manufacturing back. But we have to seize it." Carpe diem, Mr. President.
Originally published in the The Hill's Congress Blog, February 7, 2012.
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The President "should" have purchased a few Solar Fabrication Plants scattered throughout the US - maybe one plant per EPA Region as well as placed orders for large PV Plants in the Southern States on Federally owned lands (near the grid). Once momentum was achieved, the PV plants could have been auctioned off so some business could make PV systems for American Households - cheaper then those made in China.
The point is - orders like this CREATE jobs. Take for example the purchase of a single Aircraft Carrier. It takes Congress to place the funding in Appropriations, but once there it creates opportunities for businesses to make a tangible asset we need for this country. The net result - a $5 billion dollar ship that protects and serves AND employs 10,000 to 20,000 workers.
Again - big thinking - but more jobs created. Mr. President - if you make it another term, please consider buying stuff instead of throwing money away. Stuff creates work even if it's not cutting edge.
You could not be more wrong/the average solar panel's life expectancy is up to 30 to 40 years
"Avg house around here costs 25-35k to install, do the math"
Once again you are wrong/ a 2 Kw installation cost less than $15,000
By the way, how many of you greenies have solar panels?
Just a thought...
China consumed 49% of all the coal consumed on the planet in 2010!
If the US solar industry suffers as a result, then so be it. But it's a little hypocritical of any industry to be supporting carbon legislation, when their own industry doesn't account for their own externalities. We need to account for them across the board.
Or just take away ALL subsidies, and tax technologies that emit GHG's and use other environmentally and socially harmful practices in the supply chain. This would be even better yet... by addressing the externalities directly, instead of potentially creating more.
1. restore PACE loans so that we can all install solar for no money down - these loans are no-risk to the lender because they take first lien (by being repaid through property taxes) or to the borrower because they are designed to amortize the cost of the improvement (rooftop solar and efficiency upgrades) over 10-20 years, in amounts that correspond to the savings from the improvement.
The FHFA illegally blocked all PACE loans (killing the billions of ARRA dollars committed to the states to kickstart the programs), killing an incredible opportunity to improve property values and get every sunny, sprawling house upgraded for efficiency and blanketed with PV, while saving money and increasing energy independence. The DOJ forced them to open up a 60 day comment period about this illegal move, and we ALL need to demand restoration of PACE immediately:
http://pacenow.org/blog/
2. Implement German style feed in tariffs so that WE can own the renewable revolution, and be PAID fairly for producing clean, high-value peaker power that is more affordable and more reliable than central station power (and does not slaughter wilderness like Big Solar and Big Wind). This single policy is entirely responsible for the drastic drop in PV prices over the past 5 years and has improved the lives, property values and income stream of tens of thousands of regular people while reducing overall energy rates by 10% for everyone.
continued...
3. support microgrids, streamlined (cheap) permitting, and offer cash grants, not tax credits (like Big Solar and Big Wind get) to people who install rooftop solar.
4. implement a complete moratorium on Big Energy industrialization of public lands - we need to use the built and degraded environment, not pristine tortoise habitat, to convert to solar. The enormous costs (financial and environmental) of backward, monopoly, central station power generation can not be imposed on ratepayers, taxpayers or the planet, all of whom should BENEFIT from the revolution, not be penalized, which is the current program. Think "internet" not "dead end, one-way street."
5. commit to much more R&D for local distributed energy storage and clean backup power.
That should cover the first phase. It will be faster, cheaper, cleaner, fairer, more reliable and much better for everyone and every living thing (other than Big Energy) than the status quo, or the awful greenwashed Big Energy direction we are heading.
Itll be broke.
Regardless of how much 'love' one has for the oil industry, the amount of oil on this planet is finite and dwindling. That is a fact. The amount of solar power supplied to this planet is practically limitless. That too is a fact. Eventually, solar power will be the power source of choice (unless fusion power overtakes it). That too is a fact. Ignore the facts at your own foolishness.
Solar Panels will go the way of Cars, microwaves, cell phones, TV's, Computers, clothes .. almost everything we use on a daily basis is made overseas .. yet was originally created in the USA. $7.1 Billion for Solar R&D?? Geez guys, do you know that very little of this goes towards improving Solar Cells or their Manufacture .. most goes towards "Solar Projects" where panels are bought .. oftentimes from the Chinese .. and put in place as part of a Project to save Energy. Post Offices, Gov't Buildings, Military Bases, Schools, Colleges, .. all have Solar Panel Projects .. more is given out as a subsidy to residences.
Now the issue is before another Bureaucratic Panel (ITC) which can never make a decision.. we aren't even in charge of our own Trade anymore .. some nameless panel is ... and people on here want MORE Big Government??
This is a TRUE Example of Crony Capitalism .. and we let ourselves be the victims of it .. Thanks for the Article, enjoyed it.
Still wondering why grid tie-in isn't pushed here in CA. It made all the difference in Europe.