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What’s Up With This Solar Tariff Deal?

By George Harvey

The United States will impose a 30% tariff on imported solar panels. The tariff comes about because of complaints from two companies with U.S. factories, both claiming that Chinese competition is unfair. One, Suniva, is a bankrupt subsidiary of a Chinese company. The other, SolarWorld Americas, is a subsidiary of a bankrupt German manufacturer.

Green roof on PS 41 in Greenwich Village. Photo by Aloha Jon, Wikimedia Commons.

Green roof on PS 41 in Greenwich Village. Photo by Aloha Jon, Wikimedia Commons.

Contrary to what many people have thought, this case is not about illegal or unfair trade practices in China. Zachary Shahan made this clear in a post at CleanTechnica.com, in which he said, “The new tariffs have nothing to do with dumping or Chinese subsidies or China doing anything unfair or illegal. The new solar tariffs are being put on Chinese solar cells and solar panels only because they are cheap and two solar companies claim they have been seriously harmed by the imports.”

In fact, the tariffs were placed on all imported solar cells and panels, with specified countries’ products exempted. Notably, the countries whose solar products are subject to the tariff include all major U.S. suppliers, Germany, China, Italy, and Japan, along with such trading allies as South Korea, Taiwan, the Philippines, Canada, and Mexico.

Last August, the attorneys representing Suniva and SolarWorld claimed that imposing a tariff on solar panels would create nearly 115,000 jobs in the US, including 45,000 manufacturing jobs, some portion of which would be making solar panels. Somehow, they envisioned increasing the costs of solar panels having the effect of increasing other jobs related to the U.S. solar industry by over 65,000. I find this impossible to believe.

The Solar Energy Industries Association (SEIA) said there are only about 1,000 people working on making solar panels in the U.S. It also said that increasing the costs of panels will have a depressing effect on the solar industry. It calculated the job losses at 88,000 from the solar industry, mostly installers. While other organizations calculate other numbers, some of them much lower, the tariff does not appear to bode well for U.S. employment.

While the tariffs on solar panels will probably increase the prices of most solar systems in the U.S., they will have the no immediate effect on the rest of the world. In 2017, world installations of solar panels came to about 85,000 MW. About 52,800 MW of this was installed in China. By contrast, according to the Federal Energy Regulatory Commission, the U.S. installed 6,295 MW of solar panels in the first eleven months of the year.

Even given that December’s additions are usually very high, it is hard to imagine that U.S. installations could be even 10% of the world total for the year. China, by contrast, used up over 62% of the panels produced in the world, over six times as much as what the U.S. installed.

The thing that makes this particularly bitter is that it is entirely our own fault. While China was supporting its renewable industries and reducing pollution, the U.S. was questioning the value of renewables, ignoring climate change, permitting increased pollution, and putting efforts into fracking.

Part of the bad news is that the tariff really does not right a wrong, and since that is the case, its only effect is to provide temporary support for uncompetitive businesses. It makes those companies’ products more able to compete in the U.S. market, but it will not help them get ready to sell in the rest of the world.

There is some good news in all of this. The tariff covers 30% of the cost of the solar panels. Since the panels are probably about 25% to 40% of the total system cost, the increase is only about 7.5% to 12% of the overall cost. This means that the cost of a system is still probably lower than it would have been a year ago, while the price of natural gas is rising. Solar installations are already clearly saving money in most circumstances, and they will continue to do so.

Another thing to consider is the backlash against the tariffs in this country. Under the leadership of the Rocky Mountain Institute, a large number of organizations are getting together intentionally to reduce the costs of solar installations in this country. At least some of the ideas floated in the early part of this effort include increased local assembly.

The tariffs will hurt someone. They will probably have nearly no effect on China. We can only wait to see who has been hurt and how much.

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