New Report Further Polarizes Solar Manufacturers on China-Tariff Issue
A new report commissioned by the Coalition for Affordable Solar Energy (CASE)—an alliance of about 70 solar companies whose rallying message declares global competition has made solar energy a reality around the world—finds that if the U.S. government imposes a 100% tariff on imported solar PV cells and modules from China, the nation could see as many as 50,000 net lost jobs over the next three years.
CASE—whose more than 70 members include prominent U.S. companies like AES Solar and Westinghouse Solar—has lambasted an Oct. 19 petition by the seven-member Coalition for American Solar Manufacturing (CASM), led by German solar panel maker SolarWorld, to the U.S. International Trade Commission (ITC) to halt the importation of heavily subsidized solar cells and panels from China. “Solar World’s action to block or dramatically curtail solar cell imports from China places that goal at risk,” it said. The group also stands against “protectionism,” which it says will harm the future of U.S. solar power.
“Tariffs Will Cause a Slump in Demand”
A Brattle Group report commissioned by CASE finds that the imposition of tariffs will “slow the growth in domestic demand for photovoltaic systems by homeowners, commercial establishments and power producers, resulting in substantial job losses.”
The study examined the impacts that imposing a 50% tariff or a 100% tariff would have on the U.S. solar industry through 2014. “Both scenarios are lower than the up to 250% tariffs sought by SolarWorld, the German-based solar cell company, in its petition to the U.S. Commerce Department and the U.S. International Trade Commission,” CASE claims in a statement. “For each scenario, the study provides both a low and high estimate to account for variability in modeling the price elasticity of supply and demand.”
According to the study, a tariff of 100% would result in consumer losses between $698 million and $2,620 million. That would eliminate between 16,917 and 49,589 jobs over the next three years. Similarly, a tariff of 50% would result in net consumer losses between $621 million and $2,287 million. That would cause between 14,877 and 43,178 job losses over the same period. These figures are all net of any potential gains in cell or module manufacturing.
“This analysis makes it clear that imposing even a 50% tariff, much less than SolarWorld has requested, would be devastating for American workers,” said Jigar Shah, president of CASE. “We cannot allow one company’s anti-China crusade to threaten the U.S. solar industry and tens of thousands of American jobs.”
“No Tariff Means Demand Growth”
According to the Brattle analysis, if no tariff is imposed, “the aggregate demand for photovoltaic systems is expected to grow from 1,678 MW in 2011 to 4,894 MW by 2014. A 50% tariff will raise industry-wide prices and delay solar industry growth, with total MW demand falling to as low as 3,350 MW in 2014. A 100% tariff will delay this growth even more with demand falling to as low as 3,159 MW in 2014. It is a significant decline in the market for solar cells that is central to the decrease in jobs identified in this study.”
Another aspect analyzed in the report is the effect of likely retaliation by the Chinese to any U.S.-imposed tariff on imported solar cells from China. According to the report, “retaliation would likely take the form of a tariff on U.S. polysilicon exports. The U.S. is a major supplier of this component of photovoltaic modules, and removing Chinese demand for U.S.-manufactured polysilicon is expected to result in around 10,881 U.S. job losses in the first year after tariffs are imposed.”
Notably, The Brattle Group’s study did not consider the potential impacts that increased solar electricity prices could have on undermining support for solar policy across the United States. Analysts have expressed concern that solar industry infighting and higher prices would undermine the solar industry’s credibility and public policy support.
“Cost is the single most important factor in the ability to grow U.S. solar markets. Most U.S. incentive programs are predicated on a declining cost-curve. In these political and economic times, getting to scale will depend on parity with alternatives,” said Adam Browning, executive director of Vote Solar Initiative, a nonprofit public advocacy organization that works to build state solar markets.
“A Highly Speculative Report”
The seven-member CASM alliance representing manufacturers of crystalline silicon solar cells and panels called CASE’s report a “highly speculative study [that] ignores the illegality of China’s actions and fails to consider the harm those actions have caused to high-tech manufacturing jobs in the solar sector.”
“We do know that thousands of good-paying American manufacturing jobs have already been lost to illegal Chinese dumping and subsidies for solar products. Our goal is to build America’s solar manufacturing base and the good jobs with benefits, innovation and competition that come along with it,” said Gordon Brinser, president of SolarWorld Industries America in a statement.
Several points must be considered when evaluating the CASE study, CASM says. Foremost among them are that “Chinese solar producers are importing dumped and subsidized goods. They are breaking U.S. laws and international treaties that the world community has deemed essential to preventing government-sponsored destruction of foreign industries. Solar manufacturers of the West didn’t start a trade war; in fact, we’re attempting to stop it,” it says.
“Even as the Chinese importers claim to serve the interest of affordability, end-user pricing has continued its accustomed year-over-year decline, but wholesale prices have collapsed. The American consumer is not benefitting much from Chinese trade aggression; the Chinese importers are. But U.S. consumers will sustain the brunt of economic harm if China cinches a monopoly over world production, destroying the U.S. domestic manufacturing industry along the way.”
Moreover, the CASE study assumptions about job losses “mask an important distinction in job categories,” CASM says. “Study after study shows that high-tech and manufacturing jobs, with comparatively high wages and benefits, are the type of jobs we should aspire to create and maintain. They offer a high job multiplier and spawn product innovation. Further, widespread networks of installation workers still will be required to install the solar products of rebounding, law-abiding competitors.”
CASM also alleges that the study “falsely assumes” that the U.S. solar market would collapse without dumped and subsidized Chinese solar panels. “There is no evidence to support this assumption,” it claims.
Sources: POWERnews, CASE, CASM