We were invited over last May by our friend Thomas for a long weekend with his family in the Black Forest area of southern Germany. As we drove around the rolling countryside and woodland, I was surprised by the number of houses, with roofs covered with solar panels – see photo below. Green energy was really taking off. Why couldn’t we do the same in the UK?
He explained Germany had got into production of photo voltaic cells for the panels at an early stage. As a result a number of companies had started producing the panels and generating new jobs in the area.
It was great for the German economy, but the good news had been quickly followed by the bad news. Chinese companies began ‘dumping’ panels at such low prices that local companies couldn’t compete and collapsed. It was alleged the price of the Chinese panels was the result of large subventions from local and provincial Government.
Last weekend a story In the New York Times International (28 July 2013), “Europe and China agree to settle solar panel fight” provides a follow up. The EU trade commissioner reported that a deal had been done with the Chinese to settle for a minimum panel price of €0.56 for every deliverable watt; and that as a consequence no tariffs would be charged on Chinese panels.
It sounded OK til the EU manufacturers angrily pointed out that this was the same as the ‘dumping’ price of the panels now being sold by the Chinese. They promised to sue in the courts.
In the US meanwhile tariffs have already been slapped on the import of ‘dumped’ Chinese panels; and China has retaliated by announcing plans to put on 50% tariffs on polysilicon from the US and South Korea, from which the panels are made.
It’s clear that the Chinese have offered substantial incentives for solar panel production, including the provision of huge loans from state owned banks. As a result their production costs are a quarter of what they were five years ago and the industry represents over 6% of all Chinese exports to Europe.
It’s clear too that a solution is needed, but hammering out compromises on environmental and trade issues is tough work. Retaliatory tariffs won’t help the US, the EU or China. Who’s betting on how this will end?