Jigar Shah co-founded SunEdison in 2003 and scaled it up to become the largest U.S.-based solar developer. CREDIT: Coalition for Affordable Solar Energy, CASE
Last October the US subsidiary of German-based SolarWorld, a manufacturer of polysilicon solar cells, filed a complaint with the U.S. Department of Commerce and International Trade Commission alleging that China was selling solar cells in the US a low prices because of unfair subsidies. SolarWorld defends its action in terms of protecting US manufacturing jobs. But a closer look at the US solar industry demonstrates that SolarWorld, if successful, will do far more to harm the US solar industry than competition from Chinese solar cell manufacturers ever could.
First, let’s stipulate that the goal of the trade case is to raise the price of solar power to US consumers. This is exactly what Gordon Brinser, President of SolarWorld Industries America, told National Public Radio — “The prices will have to increase, you know, a little.” Of course, Brinser’s company is seeking tariffs of 50% in one instance and 250% in two others – hardly “a little” price increase. Such a steep increase, while good for SolarWorld, will have a devastating impact on the rest of US solar industry where the vast majority of jobs are.
According to The Solar Foundation, of the more than 100,000 jobs in the U.S. solar industry in 2011, fully 52% were in installation, 18% in sales and distribution, and 24% in manufacturing with the bulk of those jobs in the manufacture of items other than polysilicon solar cells. Primarily, because of the significant decline in the cost of polysilicon and prices for solar cells, modules and panels, the growth of solar installations in the US has skyrocketed. Yet, both industry growth and jobs are threatened by SolarWorld’s selfish petition.
Recently, the Coalition for Affordable Solar Energy (CASE), which represents 97 to 98% of the jobs in America’s solar industry, asked The Brattle Group to analyze the impact of tariffs on imported solar cells. The findings are stunning: a 100% tariff on imported solar PV cells and modules from China would result in as many as 50,000 net lost jobs in the U.S. over the next three years. Furthermore, retaliatory tariffs placed on U.S. exports of polysilicon to China would put nearly 11,000 more American jobs at risk in the first year following tariff imposition.
Through 2010, the last year for which data are available, the US solar industry had a positive balance of trade with China of about $400 million. This is due, in large part, to the polysilicon and solar manufacturing equipment that U.S. companies sell to China. Just as installers will be adversely affected by higher prices for solar panels, so too will US manufacturers that currently sell to Chinese companies and that are worried about SolarWorld’s action triggering a trade war. For example, the Chairman and CEO of Dow Corning Corp. wrote in a December oped that their company had invested $5 billion to expand polysilicon manufacturing in the U.S. They argued that “The pending case raises concerns, but resolving this issue through an adversarial confrontation will impede both countries’ abilities to benefit from a growing solar market both in the U.S. and abroad. Such benefits are only possible through lower prices catalyzed by healthy competition between global manufacturers.”
Finally, in addition to the negative impact on American jobs and sales of U.S. manufactured solar goods to China, a tariff on solar cell imports will undercut the national objective of expanding the use of clean, renewable energy. In recognizing the importance of obtaining the lowest cost solar cells to expand the use of solar energy in the U.S., Robert F. Kennedy Jr. wrote in the LA Times last year, “America needs policies that will release its potential for alternative energy, but a trade war with China is a terrible idea — for American jobs, prosperity and the environment.”
The fact that current U.S. law allows a German company such as SolarWorld to file a petition to protect itself from tough foreign competition without having to consider the broader impact on the entire U.S. solar industry suggests a need to adjust an inadequate law to meet today’s economic conditions. Hopefully cooler heads in the Administration will prevail and some way will be found to negotiate a settlement to this dispute so that the U.S. industry can continue to grow and provide thousands of Americans with good-paying middle-class jobs.
By Jigar Shah, Chair, Coalition for Affordable Solar Energy