MCT FORUM, By Jigar Shah –
Six decades ago, Gen. Omar Bradley warned that expanding the Korean War into China would be “the wrong war, at the wrong place, at the wrong time, with the wrong enemy.” Now the same could be said about the trade war that is brewing with China in the solar energy industry.
Cutting off China and threatening U.S. solar jobs started in October when a German company with a manufacturing facility in Oregon filed a trade complaint with the U.S. International Trade Commission and the Department of Commerce demanding that punitive tariffs be imposed on solar panels and cells imported from China. Just before New Year’s Day, several U.S. manufacturers filed a similar petition against China and Vietnam seeking special surcharges on wind towers imported from these countries.
Now that the first shots have been fired, there’s a growing danger that China will retaliate. Already, China is considering asking the World Trade Organization to investigate alleged unfair practices in U.S. clean energy policies, including programs in Washington, California, New Jersey, Ohio and Massachusetts.
If these frictions ignite a full-scale trade war, our country’s casualties could include eliminating many of 100,000-plus good-paying jobs (which have been expected to grow to almost 124,000 at the end of 2012), delaying dozens of solar energy projects, raising prices for consumers, reducing our energy security, and reversing the progress of an industry that is running an all-too-rare trade surplus with the rest of the world, including China.
For all the sound and fury, low prices for solar panels and cells aren’t the problem, and protectionism isn’t the solution. Several decades of private investment, public support and scientific progress are bearing fruit for a U.S. solar energy industry that now can generate electricity with costs, in some markets, that are competitive with power produced from fossil fuels.
At a time when the growth rate in the entire economy is a sluggish 0.7 percent, the U.S. solar industry, now numbering almost 5,000 companies, is expanding at a rate of 6.8 percent a year. Since 2009, the sector has doubled its workforce, providing more than 100,000 high-skilled, high-wage jobs, including installers, technicians and professionals in scientific research, finance and allied services.
Most U.S. solar energy jobs are in designing, engineering, installing, maintaining and selling solar energy systems, not in manufacturing solar panels and cells. Low prices for these products — which are manufactured in the United States and in Germany and Japan, as well as in China — are promoting the industry’s progress and growth. From 2008 through 2011, the 50 percent reduction in the prices for solar panels encouraged an 800 percent increase in the market for solar energy systems.
Nor need the Chinese government’s support for solar energy pose problems for the U.S. industry. The U.S. has a patchwork of programs, including research grants and tax credits, to promote the solar industry, as do other technologically advanced countries, including Japan and Germany. In the United States, 29 states now have “renewable portfolio standards” requiring increased production of energy from solar, wind, biomass, geothermal and other renewable sources.
Still, compared to its counterparts in other advanced economies, U.S. solar energy needs smarter, steadier, and more substantial support. Historically, the United States has provided 13 times more incentives for fossil fuels than for renewable energy sources of all kinds. Instead of riding the on-again, off-again “solar-coaster,” the US solar industry needs a clear commitment from the federal government to a comprehensive plan to ease the transition from a carbon-based economy to clean energy.
But the last thing the U.S. solar sector needs is a trade war that will throw our industry and its jobs — and the entire economy — into reverse gear.
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