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Why we Need a Stiff Tax on Chinese Solar Goods

A Clear Benefit Would be to Stem the Flow of Cheap Chinese Panels that Lead to Devastating Pollution

The blogosphere is abuzz with news of struggle in the US solar industry. Last week, Solarworld, the largest manufacturer of conventional solar panels in the United States, submitted a petition for a tariff of more than 100 percent on solar panels imported from China. Six other panel makers signed the petition as well, but those companies have preferred to remain anonymous. The petition alleges that Chinese companies receive government subsidies that are “illegal” under World Trade Organization rules, and are “dumping” panels on the U.S. market at price points too low to compete with. Panels can now be bought wholesale for as little as $1.20 per watt, down from $3.30 in 2008.

Photo by Flickr user Living Off Grid Chinese companies can pay their factory workers a pittance, and expose
them to conditions that would be illegal elsewhere in the developed world.

A heavy tax on Chinese panels would make American companies and individuals more likely to purchase domestically-made panels, and give American manufacturers a much-needed boost in sales.

While the solar industry has enjoyed rapid growth in the last few years, a changing market both domestically and internationally is leading to leaner times. Solar company stock prices have dropped heavily in the last few weeks, and the industry is still reeling from the August bankruptcies of three solar companies including the high-profile panel maker Solyndra, which had received $528 in federal loan guarantees. Solyndra folded after a precipitous drop in orders for its products, which was caused both by the glut of cheap imported panels and by the sunset of some incentives for solar installation.

China, by contrast, is investing more and more in the clean-energy sector.  It currently accounts for up to two thirds of global solar panel production, and exports about 95 percent of its panels to foreign markets. China has indicated plans to install more solar panels domestically, but for now, the panels are mostly seen as a profitable export product.  Government subsidies, and consistently pro-industry legislation, help Chinese companies achieve lower price points than other manufacturers overseas.

Relative to China and many developed European countries, subsidies and industry support for solar companies are lacking in the United States.  Federal and state incentives are beginning to tail off, and some solar businesses are finding it beneficial to relocate.  The New-Jersey based Natcore recently announced that its newest research venture will be based in Italy, where the company found better collaboration among solar companies. Italy, which is similar in size to California, installed more solar panels in 2009 than the entire United States.

To make matters worse, the American solar industry is divided on the issue of imported Chinese panels. Manufacturers such as Solarworld and Solyndra have protested that the abundance of cheap Chinese panels greatly reduces market demand for their own products. But solar development and installation companies, which buy panels from the market rather than selling their own, are more amenable to the low prices.

Arno Harris, CEO of solar developer Recurrent Energy, said the petition to impose a tariff on Chinese panels would “stop growth,” and Julie Blunden, VP of external affairs at SunPower, called the petition an “unfortunate distraction.” American environmental groups remain divided, and mostly silent, in this debate. Some advocate for the development of a strong American clean energy industry, which implies supporting a tariff, while others call for installing as many panels as possible, no matter where they come from.  But it remains an important question: how can the Chinese sell their panels so cheaply?  I’ll give you a hint: it’s not pretty.

The real savings come through externalization. Chinese companies can pay their factory workers a pittance, and expose them to conditions that would be illegal elsewhere in the developed world.  The social and healthcare costs of these conditions are not considered in the company’s accounting.  Also, China’s near-total lack of environmental protection measures opens the door to cost-cutting measures that are, frankly, the stuff of nightmares. This report from the Henan Province, near the Yangtze river, tells of truckloads of highly toxic silicon tetrachloride dumped every day onto the ground outside a factory’s gates. “The land where you dump or bury it will be infertile. No grass or trees will grow in the place. . . . It is like dynamite — it is poisonous, it is polluting. Human beings can never touch it,” says Ren Bingyan, a professor at the School of Material Sciences at Hebei Industrial University. Villagers nearby have noticed crops wilting under a fine white powder, and rock-like deposits are aggregating in kettles used for boiling tap water. 

Silicon tetrachloride is a byproduct of making polysilicon, a key component in conventional solar panels. In European and American polysilicon plants, this byproduct is recycled back into the manufacturing process. But recycling silicon tetracholoride is energy-intensive and expensive. Chinese companies have found it cheaper to simply dump the stuff.  This follows a long precedent of lax regulation and disregard for the ill effects of industrialization. In September, large protests outside a factory of the Zhejiang JinkoSolar Company in the city of Haining forced the plant to close. Cars were overturned, offices were ransacked, and 23 were arrested in protests that blamed the panel factory for toxic emissions into the air and water, leading to large numbers of dead fish and unusually high rates of cancer deaths in the area.

As long as there is demand for cheap solar panels, there will be more of these environmental and social scandals. Regardless of the complex economic arguments surrounding tariffs, a clear benefit of a heavy import tax would be to stem the flow of cheap Chinese panels that lead to devastating pollution.

If we want to make any sort of valid claim about solar being “clean energy,” we have to begin with good attention to where the panels come from, and what social and environmental impacts accompany their production.   

Brian Scoles, Intern, Earth Island JournalBrian Scoles photo
When not writing for the Journal, Brian pursues all sorts of interests not at all related to his degree. He is passionate about intentional community living, wilderness exploration and leadership, and most recently, activism. He also works with Applied Mindfulness and is a contributor at Sustainablog.

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