This week, the price movements are mostly concentrated in the mono-si supply chain. Because there were sufficient inventories for mono-si .. more
By D.A. Barber
Solar Trade War Background
The highly controversial U.S .trade case against China began on October 19, 2011, when the U.S. arm of Frankfurt-based SolarWorld and six other U.S. solar manufacturers filed a petition claiming that Chinese PV companies benefit from subsidies like free land and low-interest government loans that allow the companies to dump PVs in the U.S. market for less than it costs to manufacture and ship them which is driving American companies out of business.
SolarWorld and the 6 U.S. PV makers, including Milwaukee’s Helios Solar Works and Somerset, NJ-based MX Solar USA, a Milan-based solar manufacturer, filed the petition simultaneously with the U.S. International Trade Commission and the U.S .Department of Commerce under the newly formed Coalition for American Solar Manufacturing (CASM). The remaining four of the original 7 petitioners have remained anonymous.
"China's predatory and illegal aggression is crippling the U.S. industry," the Coalition for American Solar Manufacturing said in an October 19, 2011, written statement.
“The U.S. solar industry and workers can compete with any solar producers in the world. They should not, however, be forced to compete against the massive shipments of illegally dumped and subsidized imports supported by the entire Chinese government,” noted the Coalition, which is made up of 7 companies that manufacture solar cells and modules with plants in nearly every region in the United States.”
SolarWorld had made the decision in early 2011 to assemble a coalition for its case against China before Solyndra’s difficulties became widely known, according to statements made by Gordon Brinser, SolarWorld’s president.
Then on May 17, 2012, the U.S. Commerce Department imposed a preliminary ruling on tariffs on Chinese PV cells and panels. The Commerce Department also granted CASM’s "critical circumstances" findings request to counter any rush of Chinese PVs into the US in the months before the decision, making the tariffs retroactive 90 days. The Commerce Department ruling covers imports of PV cells produced in China and solar panels made in China that use Chinese-made PVcells as well as panels made outside of China that use PVs produced in China. The Department of Commerce, to avoid name changes and shipping under different names from third countries has also applied the tariffs to Chinese panel makers who have not previously exported to America. Some stocks of major Chinese solar manufacturers fell on the May 2012 news.
“In the first major ruling in the trade cases, the U.S. International Trade Commission issued a unanimous preliminary ruling that Chinese trade practices were injuring the domestic manufacturing industry. In its next major ruling, the Department of Commerce will announce on May 17 the extent to which Chinese solar industry has dumped solar cells and panels on the U.S. market at artificially low prices to drive out U.S. competition,” according to a CASM.
The Commerce Department chose China's Suntech and Trina Solar as"mandatory respondents" in the case, as they were the two biggest exporters during the period examined. Suntech Power Holdings, the world's largest producer of solar panels, will face anti-dumping duties of 31.22 percent. Trina Solar faces a tariff of 31.14 percent and Yingli Solar will be subject to a tariff of 31.18 percent.In total, the Department of Commerce targeted 61 Chinese companies including LDK Solar, Canadian Solar, Hanwha solar One, JA Solar Holding and Jinko Solar.
A final decision on the tariff duties is expected in October.
"Despite these harmful trade barriers, we hope that the U.S., China and all countries will engage in constructive dialogue to avert a deepening solar trade war," said Andrew Beebe,Suntech's chief commercial officer. "Suntech opposes trade barriers at any point in the global solar supply chain. All leading companies in the global solar industry want to see a trade war averted. We need more competition and innovation, not litigation."
Meanwhile, German-based SolarWorld, the largest maker of conventional solar panels in the U.S. with operations based in Oregon that employees 1,100 US workers, is also exploring whether to file a similar action in Europe against China.
Rising Tariff Opposition
The trade case has divided the U.S. solar industry into a high-profile battle between manufacturers and installers. A two-way trade war would shrink these projects and hurt many U.S. companies that either benefit from exporting solar products to China or import solar panels. In 2011, imports of solar cells from China were valued at about $3.1 billion, according to the Commerce Department. That was up from $1.5 billion in 2010 and $640 million in 2009. On the other end of the trade war are exports to China: According to statistics from the China Chamber of Commerce for Import and Export of Machinery and Electronic Products, China imports more than $2 billion worth of polysilicons, ethylene vinyl acetate and other materials from the US every year.
The Coalition for Affordable Solar Energy (CASE) was formed in November 2011 to oppose the trade petition filed in October 2011. Today, CASE members include fast-growing Bay Area startups like SolarCity, SunRun and Sungevity that install solar panels, including panels made in China. "This is not a good outcome for the U.S. solar industry," said Jigar Shah, president of CASE.
Most U.S. solar installers use Chinese-made photovoltaic panels and many large domestic solar installers have lobbied aggressively against tariffs, arguing that increased panel costs will slow U.S. solar adoption and kill more jobs than it saves in manufacturing. Studies indicate that the majority of solar employees are not active in manufacturing jobs but rather are in downstream positions such as installation, sales, etc., which rely on low-cost equipment to be competitive. In 2011, only a quarter of American solar jobs were in manufacturing, compared to over half in installation.
According to CASE, “the American solar manufacturers alone opposing SolarWorld’s campaign represent nearly three times more jobs than the public petitioners in the Coalition for American Solar Manufacturing.”
“It’s overwhelmingly clear now that the vast majority of the American solar industry opposes SolarWorld’s crusade to tax its competitors at the expense of the American solar industry. SolarWorld certainly doesn’t represent the bulk of American solar manufacturers, much less the American solar industry,” said Jigar Shah, President of the Coalition for Affordable Solar Energy. “Hopefully, in two days, the American solar industry will once again be able to breathe a collective sigh of relief and we can then put SolarWorld and this distracting chapter in our industry’s history behind us.”
The Coalition for Affordable Solar Energyis critical ofSolarWorld and Coalition for American Solar Manufacturing because CASM will not identify the other original companies that filed the complaint or even its full membership. CASM lists their “associate members” on their web site as 213 U.S. employers representing 17,261 American workers with large majority of whom are “active in parts of the U.S. solar PV value and supply chain other than manufacturing.” But those are “associate members” which are simply organizations and businesses that support the tariffs and not part of CASM, according to the website:
“As an associate coalition member, your organization will merely register its support for the effort and agree to be counted and even publicized as a supporter. It will have no direct role in the trade petitions with the U.S. Department of Commerce and the U.S. International Trade Commission that the coalition has brought against Chinese manufacturers.”
On the other hand, according to the Coalition for Affordable Solar Energy’s more transparent website, CASE’s anti-tariff member companies represent “97% to 98% of the U.S. solar industry jobs” and include:
Solar Energy Industries Association Stays Neutral
U.S. Solar Energy Industries Association (SEIA) is not expected to take a side over the trade fight against China because it’s membership includes American subsidiaries of several other Chinese solar manufacturers such as Suntech, as well as American companies that sell raw materials and factory equipment to China. Established in 1974, the Solar Energy Industries Association is the national trade association of about 1,000 member companies.
According to Rhone Resch,president and CEO of the Solar Energy Industries Association, says the dispute is “a matter of manufacturer versus manufacturer and it’s not the whole industry” and that SEMI’s role “is only to keep people informed of what develops.” Reschissued a statement on tariff ruling on May 17, 2012, in which it noted that “disputes within one segment of the industry affect the entire solar supply chain--and these broad implications must be recognized.”
“In addition, the U.S. solar manufacturing base goes well beyond solar cell and module production and includes billions of dollars of recent investments into the production of polysilicon, polymers, and solar manufacturing equipment, products which are largely destined for export. If the U.S.-China solar trade disputes continue to escalate, it will jeopardize these U.S. investments.
Given these broader implications, it is imperative that the U.S., China, and other players in this dynamic global market work constructively to avert or resolve trade disputes that will ultimately hurt consumers and businesses throughout the solar value chain."
The number of downstream solar installers and project developers who oppose tariffs has been rising. Joining the fight against the tariffs are manufacturers including Dow Corning, Hemlock Semiconductor, GT Advanced Technologies, MEMC, REC Silicon, andSuntech America. These companies represent over 3,000 jobs throughout the U.S, particularly in states such as Arizona, California, Michigan, Montana, New Hampshire, Oregon, Tennessee, Texas and Washington.
Meanwhile, two other very prominent U.S. solar companies, First Solar and SunPower, have stayed out of the fight.
In a survey of recent comments by US solar companies opposing the tariffs, EnergyTrend found a surprising number of newspaper editorials, interviews, and press release statements:
“If successful, SolarWorld’s trade case will undermine the long-term job creation potential, infrastructure investment and overall growth of the U.S. solar industry,” remarked Kevin Lapidus, senior vice president of legal and government affairs of SunEdison in a May 3, 2012, CASE press release.
Susan Wise, a spokeswoman for San Francisco-based SunRun, told Forbeson May 18, 2012: “If finalized, this decision would move us backward in the effort to make solar affordable for Americans,” Wise said in an e-mail. “It would make prices higher at the exact moment when solar power is starting to become competitive with fossil fuels in more markets.”
Jonathan Bass, a SolarCity spokesman also told Forbeson May 18, 2012: “Artificial cost increases designed to help a handful of companies at the expense of thousands of others in all fifty states simply don’t make sense.” SolarCity employs 1,800 workers in a dozen states.
The Semiconductor Equipment and Materials International (SEMI) had taken a neutral position in the China trade dispute, “encouraging all parties to work together on measures that would eliminate all trade and investment barriers to solar energy.” But the organiztion issued a statement on May 18, 2012, after the preliminary determination of the U.S. Commerce Department to impose tariffs:
“While SEMI supports the rule of law, there can be no doubt that these tariffs may have a serious effect on the adoption of solar PV in the U.S. With a majority of U.S. solar panels coming from China, implementing these tariffs will result in higher prices on U.S. solar products, disruption of utility and other large-scale solar projects, increased risk for continued trade friction and retaliatory trade action, and most importantly, reduced adoption of solar power.”
SEMI notes that thecurrent trade dispute“is just one instance of growing trade barriers that are proliferating and encumbering the deployment of renewable energy. PV solar and other renewable energy industries must begin the long and difficult process of developing a comprehensive and holistic world trade agreement that promotes free and open trade and accelerates adoption of renewable energy.”
Arno Harris, the founder of Recurrent Energy, a solar developer now owned by Japan's Sharp, recently wrote a post published in National Geographic's Great Energy Challenge:
”Let’s state plainly what’s going on here. A group of manufacturers who can’t compete with today’s solar panel prices are seeking to erect trade barriers to make the US a ‘safe market’ for their own more expensive solar panels. They want to prevent Americans from getting access to low-cost solar panels and low-cost solar electricity so they can sell their own more costly product to them instead.
This is clearly a tactic in the narrow self-interest of the manufacturers joining the petition. It’s not in the interest of American consumers. It’s not in the interest of ratepayers. It’s not in the interest of our national security. And it’s certainly not in the interest of slowing global climate change.”
Dow Corning manufactures polysilicon, much of which it exports to China. Robert D. Hansen, president and CEO, Dow Corning Corporation (not a CASE member, but against SolarWorld’s wrotein a May 15, 2012, written statement:
“Dow Corning and Hemlock Semiconductor are among the world’s leading suppliers of polysilicon and other key solar materials that power solar innovation. We believe that the trade case brought against Chinese solar manufacturers by SolarWorld could undermine the solar industry’s significant progress at the very moment it is poised for success. It’s important to remember that no nation or industry “wins” when trade disputes escalate – and in this case, we are concerned about serious unintended consequences such as local job loss and retaliatory tariffs against the U.S.”
Tom Gutierrez, CEO of GT Advanced Technologies, wrotein a May 15, 2012, written statement: “Ultimately, the protectionism that SolarWorld is encouraging fosters dependence and high-cost business models, rather than the agile approaches that are most successful in global competition. Now is the time for the U.S. solar industry to move forward with creating American jobs and enhancing our energy security. We are proof that American solar manufacturing can compete without special protections.”
Tore Torvund, CEO of REC Silicon, wrotein a May 15, 2012, written statement: “Tariffs are not in the best interest of American solar manufacturing, the American solar industry, or American solar consumers. We are concerned about the increased likelihood that China will retaliate with their own unilateral tariffs on polysilicon exports from U.S. producers such as REC Silicon. No one benefits in a global solar trade war.”
The irony that the China-US solar trade war has been initiated by a German-based rather than a US-based company has not been lost.
Interestingly, some tariff critics have touched upon possible solutions.
The Editors o fBloomberg wrote onMay 15, 2012: “One idea promoted by economists is to model an agreement on the 1996 Information Technology Agreement. The ITA, which now has 70 member countries, eliminated tariffs on hundreds of goods and products, and resulted in skilled countries like the U.S. designing technology products (think iPad) and labor-rich countries like China assembling them (think iPad). Any agreement would have to deal with government subsidies and be subject to dispute settlement by the WTO.”
SEMI has taken a neutral position in the China trade dispute, “encouraging all parties to work together on measures that would eliminate all trade and investment barriers to solar energy.” On May 18, 2012, the organization wrote:
“Now is the time to take an active position urging for the establishment of a global free trade agreement for renewable energy products. This will not be an easy achievement nor will it be accomplished anytime soon. However, a free trade agreement on PV and renewable energy products must be our ultimate goal in order to sustain a healthy global industry focused on replacing fossil fuels with clean, renewable energy sources.
The key model for such an agreement can be found in the World Trade Organization’s Information Technology Agreement (ITA), currently celebrating its 15thanniversary. In 1996, the ITA was adopted by 29 participating countries establishing the goal to eliminate all tariffs on information technology products and manufacturing equipment. The number of participants has grown to 70, representing 97 percent of world trade in information technology products. At the time of its adoption, semiconductors and information technology had undergone years of similar trade friction as policymakers around the world attempted to encourage the development of new IT industries and promote domestic manufacturing. The ITA was the culmination of the widespread recognition that free and open trade ultimately benefits companies and consumers in all countries.”
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