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Solar opportunity or new trade war?

by Daniel Kammen

The Solyndra uproar and the International Trade Commission Dec. 2 decision to investigate Chinese solar panel manufacturers for dumping their products below cost in the United States threatens to distract us from what we need most: a proactive, long-term clean and sustainable energy strategy.

If you look beyond the partisan politics that have recently engulfed the solar industry, two irrefutable facts stand out:

—The solar energy industry is at a tipping point. With a diverse set of promising technologies coming online that are affordable and scalable today, or soon will be, the industry is becoming competitive with conventional energy sources.

—Ill-conceived and reactionary policies could serve to undermine this fast-growing, innovative and job-producing sector.

On the first point, the facts are clear: The solar industry worldwide is the fastest-growing source of electricity generation. What was once largely a rooftop-by-rooftop industry is now seeing major utility-scale projects that can rapidly meet regional energy needs.

For example, a typical midsize utility-scale solar power plant takes 18 to 24 months to build, while new coal plants take years, and new nuclear facilities can take a decade or more. And small-scale solar continues to rollout as well. When paired with energy efficiency, solar projects can transform local economies and increase the value of commercial and residential properties.

Solar installation creates five times or more the number of jobs than does investment in a natural gas plant of comparable capacity. Not only has the U.S. solar industry produced more than 100,000 jobs (a doubling since 2009) with another 25,000 expected in the next 12 months, the vast majority of these jobs are in finance, services and installation - not manufacturing.

Solar simply doesn't provide a lot of manufacturing jobs in any country, and the number is dwindling further with automation. That's why blocking imports is beside the point. The jobs of tens of thousands of Americans employed in the solar industry, however, rely on the supply of quality solar panels from many nations, including China.

China certainly should do a better job of reporting on its subsidy programs, in accordance with World Trade Organizationrequirements, and the U.S. government should demand such compliance. However, subsidy policies may have their place, as they do in the United States, to help build a strong, job-producing solar energy industry.

Even Sen. Jeff Merkley, D-Ore., who supports a petition to punish China for unfair trading practices, has acknowledged that punitive tariffs against Chinese solar panels would immediately result in job losses to American installers. Longer-term benefits are even less clear.

This raises the question of why the U.S. government would attempt to effectively pick technology winners by applying punitive tariffs against Chinese companies when what is needed is to encourage competition among all promising companies.

On the second point: Some in Congress have used the failure of Solyndra as a pretext for cutting U.S. support for solar. That's wrong. It's equally wrong to use it as a pretext for creating trade barriers. What would be more useful is an assessment of a “whole systems” approach to reducing costs from materials to manufacturing to the solar system hardware, warranties and financing.

The drop in solar panel prices, which in turn shook out Solyndra (and likely others, too), is part of the dynamic of the race to innovate and to manufacture at scale. A number of the larger solar manufacturers - whether in Germany (SolarWorld), the United States (SunPower and First Solar), Japan (Sharp) or China (Trina, Yingli) - are now manufacturing solar panels on such a scale that they have brought the cost of solar down dramatically. This, in turn, has helped to launch in the United States a new energy solution that is cost effective for ratepayers and customers.

Protectionism will drive up solar panel prices and reduce sales, stunting domestic job growth and stifling innovation in the field as a whole. What we need instead is a “race to the top.” In this race, everyone wins.

Daniel M. Kammen is a professor of energy at UC Berkeley in the energy and resources group and in the Goldman School of Public Policy. From 2010 to 2011, he was the first technical specialist for renewable energy and energy efficiency at the World Bank. This article was originally posted on SF Gate.