Don't Sacrifice Clean Energy Availability

A generation after Jimmy Carter installed solar panels on the White House roof in an effort to promote alternative energies, solar power is back.   

Costs are finally going down and, despite the recent bankruptcy of Solyndra, US jobs in this sector grew 6.8 percent last year and are expected to expand another 24 percent next year according to The Solar Foundation, a research and advocacy organization.

One obstacle to growth for some American solar producers, however, is Chinese competition.  They claim China is selling solar panels below the cost of production and, as a result, have an unfair advantage in the world marketplace.  On Wednesday, seven solar panel producers took this claim to the US Department of Commerce and called for new tariffs of more than 100 percent against Chinese panels.

An analysis by Keith Bradsher in the New York Times yesterday stated that this move, if adopted, might have unintended consequences.  He compared today’s US solar sector to the Detroit auto industry of the 1970’s and ’80.  At that time American car companies were similarly calling for tariffs on Japanese autos. 

Toyata, Nissan, and Honda’s response? 

Bradsher explains how these businesses set up factories in the US, not only avoiding costly tariffs but also helping them “stay competitive when the yen soared against the dollar.”  He believes Chinese solar producers will follow a similar path.

An outcome of increased domestic solar panel production (regardless of the company’s nationality) is appealing.  I’m not so sure, however, the Chinese solar industry accurately reflects the Japanese auto sector of the ’70 and ’80.  The gap in wages between US and Chinese workers is much greater than it was between the US and Japanese workforce.

Although Bradsher cites one example of US in-sourcing from China, I question whether it will become an industry trend.  Moving factories to the US to avoid potential tariffs would require hiring and training a new workforce that, on average, demands over 6 times the compensation of workers in China.

These wage gaps will likely encourage Chinese companies to remain in Asia regardless of new American protectionism.  Solar power jobs would be insulated by a new tariff, but the supply of inexpensive Chinese panels to US consumers would drop and, consequently, the competitiveness solar energy has tediously achieved would vanish. 

At a time when policy-makers are clamoring for alternative energies, the Department of Commerce should not make it harder to buy solar panels.