The massive gas deal between China and Russia last month— touted as a possible turning point toward cleaner air and lower greenhouse gas emissions in China—appeared to overshadow a significant development in the U.S.-Chinese relationship regarding renewable energy and its clean air potential. While many argue that the shale gas revolution in America and the big gas deal between the two Eurasian giants hold the keys to cleaner air and cutting greenhouse gases (we’ll examine that here later), there’s no question that with a need to cut greenhouse gases by more than 80 percent to head off runaway global warming renewable energy remains the holy grail.
Cutting to the chase, BBC News reported June 3 that the U.S. Commerce Department has decided to up tariffs on Chinese solar cells and panels because of unfair subsidies by Beijing to its own national manufacturers. BBC reported:
“The Department of Commerce said it plans to impose duties of between 18.56% to 35.21%. That is much higher than the tariffs announced in 2012. The duties will be levied on solar panels and the cells used to make them. Previously they covered just the cells. The US has said that import duties will help offset the subsidies given by China to solar panel makers. “
But is the U.S. doing somebody else’s bidding?
It seems BBC left out one important fact, astutely noted here June 4 by CNBC’s Everett Rosenfeld. He reported that:
“The new duties were in response to a petition from SolarWorld, a German solar manufacturer with major operations in the U.S., which sought to eliminate a loophole whereby Beijing-subsidized solar manufacturers avoided previous U.S. rulings by making key parts in Taiwan. SolarWorld argued that those subsidies significantly hurt the U.S. solar manufacturing sector.”
First, let’s be precise about the phrase “major operations.” Here’s what SolarWorld’s website says verbatim about its U.S. operations:
“SolarWorld has two major locations in the United States. The sales location in Camarillo, California, produced solar modules since 1977, whilst the site in Hillsboro, Oregon, has been bringing new expertise in monocrystalline modules to the solar group since 2008. Today, SolarWorld is operating the United States’ first fully integrated solar production at this site.”
It then goes on to show that most of the company’s operations are in Europe, but also in Singapore, Japan, and other nations around the world.
Now, let’s step back and look at the bigger picture of the U.S. Solar industry presented earlier this year in the National Solar Jobs Census 2013, released by the Solar Foundation in January 2014. The census shows that in the U.S. the majority of jobs—particularly the better paying ones— are in solar system installation, which pays workers an hourly average of $23.65 compared to U.S. solar manufacturing workers, who make $15 (the new minimum wage in Seattle) to $18.23 per hour. Here’s a 2013 breakdown of solar jobs in the U.S. from the report: installation 69,658 jobs, manufacturing 29,851, sales & distribution 19,771, project design & development 12,169, and other 11,248
Small wonder that the U.S. Solar Energy Industries Association—which represents the broad array of companies involved in the industry, from installers to manufacturers and ancillary equipment makers that build solar mounting racks, inverters, and provide other components and services needed to flip the switch of a solar power system—denounced the Commerce Department’s decision. Here’s what association president Rhone Resch had to say:
“These damaging tariffs will increase costs for U.S. solar consumers and, in turn, slow the adoption of solar within the United States. Ironically, the tariffs may provide little to no direct benefit to the sole petitioner SolarWorld, as we saw in the 2012 investigations. It’s time to end this needless litigation with a negotiated solution that addresses SolarWorld’s trade allegations while ensuring the continued growth of the U.S. solar market.”
The fact is that solar manufacturing is a global industry, dominated by multinational companies that set up highly automated production plants that employ few workers in the places that are the most economical in order to serve their markets.
Here’s a list of the top ten solar manufacturers in the world from Solarbuzz:
Note that the only company headquartered in the U.S. on the list is First Solar and it manufactures in Malaysia, as well as the U.S. Number three Sharp, based in Japan, manufactures in the U.S., Japan, Italy, and other locations.
Indeed, solar manufacturing is following the same pattern as manufacturers of clothing, cell phones, computers, televisions, household appliances, cars, and other goods. It’s chasing the lowest operational costs and doing what’s needed in locating plants to access markets. Manufacturing has been doing that under free trade agreements backed by both Republicans and Democrats and largely cemented into place during the 1990s by President Bill Clinton, as detailed in our forthcoming book The People’s Republic of Chemicals.
So where does the broad public interest lie? Surely not in trade complaint cases brought by German companies in the U.S. against China. The broader interest lies in advancing solar and other forms of renewable energy to provide a variety of jobs around the world—from the U.S. to China—in the name of environmental improvement. Doing that requires bringing down the cost of solar energy, which at this point entails massive subsidies not only in Beijing, but in the U.S., where solar homeowners (and I am one, with panels produced by Canadian Solar) recently get about 50 percent of the cost of a system covered by subsidies from Washington and in my case the state of California, not to mention subsidies directed to manufacturers.
The subsidies are paying off too, having helped reduce the real cost of installed solar systems—which provide emissions-free power—by about two-thirds since 1998 in the U.S. , according to Lawrence Berkeley National Laboratory.
So what’s that old adage? People who live in glass houses . . .