Latest US-China trade dispute clouds solar forecast

On the heels of both the United States and China announcing plans to cut carbon emissions from fossil fuel use, the U.S. Department of Commerce has moved to impose up to a 35-percent tariff on Chinese-made solar cells sold in the U.S.

The U.S. move could be seen as boon to domestic solar tech manufacturing, or a hindrance to the growth of renewable energy production, but as delicate a balance as that dilemma might sound, the pros and cons are even more complicated.

Despite all the noise made about the $500 million loan made to Solyndra, a solar manufacturing firm that eventually went belly up, early in the Obama administration, loans to renewable energy concerns are dwarfed by what the federal government continues to dole out to last-century energy sources like coal, oil, gas and nuclear. Estimates range from $14 billion to $52 billion provided annually (in 2013 dollars) to the fossil fuel industry, in the forms of subsidies, tax breaks, price supports, favorable land deals, loan guarantees, infrastructure construction and maintenance, and, at the higher end, security. Even at the low end, it is more than the average annual federal aid given to renewable electricity generation since the start of the Obama administration.

Or take a look at the loan guarantees needed to start construction on a pair of new nuclear reactors in Georgia. The $6.5 billion finalized early this year is about 12 times what Solyndra received (and it should be noted, the government recouped most of their investment in Solyndra as assets were sold after bankruptcy). There is more federal money for that plant in the pipeline, and the construction loan is completely separate from liability the U.S. is obligated to cover under the Price-Anderson Act or its final financial responsibility for nuclear waste storage.

The end result is a domestic solar manufacturing industry that is a babe in arms compared with large-scale production capabilities in China and Germany. The U.S. global share of photovoltaic production fell from more than a quarter to under 8 percent in the first decade of this Century. In that same timeframe, China grew to control almost half of worldwide production.

And the “U.S.” company that brought the complaint against Chinese solar cell manufacturers that resulted in Tuesday’s Commerce Department finding? That would be SolarWorld Industries America, the Oregon-based subsidiary of German solar manufacturer SolarWorld AG. So, while the federal sanctions might protect manufacturing jobs in Oregon, they will also help the bottom line of a German solar firm that already outsells any U.S.-owned silicon-based PV manufacturer.

(SolarWorld AG recently sold a 29 percent stake to state-supported Qatar Solar Technologies, which muddies the waters further on just which manufacturer is competing fairly and which is illegally benefitting from government aid.)

But if American jobs are the focus of the Commerce move, consider this: While U.S. solar manufacturing has suffered in recent years, domestic solar installation is booming. U.S. installations in 2014 are expected to double solar installation numbers from 2012. The 6.6 gigawatts of added capacity is up over a third from last year’s record high.

And that increased rate of installation means an increased need for solar panel installers. U.S. solar installer jobs were up by 20,000 in 2013, according to the Coalition for Affordable Solar Energy, a solar installation industry trade organization. (And the argument can be made that the construction-oriented type of work required to install solar panels is more broadly accessible work than the high-tech specialty design and manufacturing skills employed by panel-makers.) Five U.S. installation companies actually weighed in against the Commerce tariffs, arguing that higher prices on PV panels will decrease demand and threaten installation jobs.

Further, Chinese panels are predominantly the type made from crystalline silicon photovoltaic cells. About a quarter of that crystalline silicon comes from the United States. In 2013, that was estimated to be a $1.5 billion export to China. The last time the U.S. imposed duties on Chinese panels, China retaliated with tariffs on U.S. polysilicon.

But simple (or far from simple) profit-and-loss statements are not the only bottom lines that figure in calculating the cost of different solar suppliers. The solar panels produced in China have twice the carbon footprint of panels made in Europe. The difference was attributed to weaker environmental and efficiency standards and China’s far greater reliance on coal and other non-renewable energy sources, according to a study conducted by Northwestern University and the Department of Energy's Argonne National Laboratory.

A Chinese-made silicon PV panel would have to be used 20 to 30 percent longer than a European panel to produce enough energy to justify its increased environmental impact.

China manufactures about 60 percent of the world’s solar panels. Would the global environment benefit from fewer solar panels, but with a larger percentage coming from non-Chinese manufacturers?

Like with the rest of the trade calculations around solar, the answer is a little hazy.