Daunt­ing chal­lenges ahead for Chi­nese so­lar com­pa­nies

“Even so­lar en­ergy has ig­nited con­tro­versy over whether so­lar pan­els should be sold cheap to en­cour­age more buy­ers or sold at higher costs to pro­tect Amer­i­can jobs.”

The Pak Banker - - Front Page - Tom Mcgre­gor

MAN­U­FAC­TUR­ING so­lar pan­els are costly en­deav­ors even in coun­tries that en­joy low la­bor costs such as in China. Con­se­quently, so­lar com­pa­nies from all over the world ap­pear to need help with ei­ther sub­si­dies or spe­cial gov­ern­ment loans. Mean­while, eco-friendly com­pa­nies tout a cleaner en­vi­ron­ment as good in­cen­tive to pro­duce al­ter­na­tive en­ergy re­sources that in­clude wind­mills, hy­dro­elec­tric dams and so­lar pan­els. Yet, en­vi­ron­men­tal­ists have al­ready no­ticed a few flaws to the strat­egy.

To cite wind en­ergy as an ex­am­ple, some crit­ics have pointed out that wind­mills are noisy, ob­struct the view of nat­u­ral land­scapes, its spin­ning ro­tors have killed birds in flight and its only ef­fec­tive on windy days.

These com­plaints would in­fer that there's no true unity with pro­mot­ing "Green En­ergy" among eco ac­tivists. Even so­lar en­ergy has ig­nited con­tro­versy over whether so­lar pan­els should be sold cheap to en­cour­age more buy­ers or sold at higher costs to pro­tect Amer­i­can jobs.

US-based com­pa­nies have taken sides on the topic. Ore­gon-based So­larWorld filed a com­plaint with the US In­ter­na­tional Trade Com­mis­sion and called for higher tar­iffs against Chi­nese so­lar com­pa­nies claim­ing they are harm­ing Amer­i­can so­lar com­pa­nies by sell­ing cheaper prod­ucts.

The com­plaint has proven suc­cess­ful. "The US will soon im­pose tar­iffs on im­ported Chi­nese-made so­lar pan­els af­ter de­ci­sion by a US trade panel Wed­nes­day, es­ca­lat­ing a trade spat that un­til now was based on pre­lim­i­nary taxes on im­ports," ac­cord­ing to the Wall Street Jour­nal.

It added, "the US In­ter­na­tional Trade Com­mis­sion found, in a 6-0 vote, that US so­lar-panel mak­ers had been injured by il­le­gal dump­ing from Chi­nese com­peti- tors, clear­ing the way for the Com­merce Depart­ment to or­der tar­iffs."

"Chi­nese com­pa­nies that ex­port bil­lions of dol­lars of so­lar prod­ucts to the US each year will face tar­iffs of up to nearly 250 per­cent," as re­ported by the Ed­mon­ton Jour­nal.

"The Obama ad­min­is­tra­tion im­posed those tar­iffs in Oc­to­ber af­ter find­ing that China's gov­ern­ment is sub­si­diz­ing com­pa­nies that are flood­ing the US mar­ket with low cost prod­ucts - a tac­tic known as 'dump­ing.' Wed­nes­day's vote means that those tar­iffs, along with anti-sub­sidy fees of up to 16 per­cent, will stand."

How­ever, higher tar­iffs do not nec­es­sar­ily guar­an­tee more Amer­i­can jobs. "Made in the USA" green goods are more ex­pen­sive due to higher la­bor costs that must com­ply with tough la­bor union laws, strin­gent fac­tory reg­u­la­tions and higher busi­ness tax rates.

Each state has dif­fer­ent tax rates and busi­ness laws to con­tend with. So­larWorld op­er­ates in Ore­gon, which has higher state taxes and tougher reg­u­la­tions than in a state such as Texas, which is con­sid­ered to be more busi­ness-friendly for fac­tory own­ers.

One could make the ar­gu­ment that a neg­a­tive busi­ness cli­mate is more to blame for the fal­ter­ing bal­ance sheets of some Amer­i­can so­lar com­pa­nies.

Af­ter higher tar­iffs go into ef­fect, po­ten­tial cus­tomers may still de­cide against pur­chas­ing so­lar pan­els since the over­all econ­omy con­tin­ues to sput­ter. "Green En­ergy" is a good con­cept, but in­ef­fec­tive when it means pay­ing for al­ter­na­tive en­ergy re­sources that has be­come un­af­ford­able.

Higher tar­iffs won't im­prove the en­vi­ron­ment ei­ther. Amer­i­cans had been more likely to buy cheaper Chi­nese-made so­lar pan­els, while it sig­nif­i­cantly re­duced car­bon emis­sions. Per­haps, a surge of "green in­fla­tion" is im­mi­nent.

Ji­gar Shah, who founded the Coali­tion for Af­ford­able So­lar En­ergy (CASE), crit­i­cizes So­larWorld for de­mand­ing Amer­i­can con­sumers pay for more ex­pen­sive green prod­ucts.

"I don't think (China) is try­ing to put us out of busi­ness," Shah told the AltEn­er­gyS­tocks news Web­site. "We never had a vi­brant so­lar man­u­fac­tur­ing in­dus­try any­way, but if they are pro­vid­ing us with pan­els at a very af­ford­able cost and there al­low­ing us to de-car­bonize our grid, I'm just try­ing to fig­ure out how this is a bad thing for all of us."

Hence, en­vi­ron­men­tal ac­tivists in the US have a few ques­tions to an­swer: Do they want to re­duce car­bon emis­sions over­all with China's help? Or do they only seek to build "Made in the USA" ecofriendly com­pa­nies, and en­force trade bar­ri­ers against Chi­nese com­pa­nies? How can higher tar­iffs re­ally help the en­vi­ron­ment?

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