SOLAR WARS:
THREATEN CLIMATE FIGHT
Amidst gloomy news in
the deteriorating climate change situation is this bright spark - the
cost of solar energy has been going down dramatically.
Martin Khor
The source of clean and renewable energy is seen as one of the major
saviours that could help power the world without emitting greenhouse
gases.The drawback is that solar energy has traditionally been more
expensive to use than carbon-intensive coal or oil.
But in recent years solar power has become much cheaper. Energy
experts predict that its cost could match that of conventional fuels in
the next few years in some areas. Solar cell prices have been falling,
from US$76 (RM235.52) per watt in 1977 to about US$10 in 1987 and only
74 cents in 2013. Between 2006 and 2011, Chinese cell prices dropped 80%
from US$4.50 per watt to 90 cents per watt. Factors for this include a
drop in price of the main raw material polysilicon (due to oversupply),
increasing efficiency of solar cells, manufacturing technology
improvements, economies of scale and intense competition.The use of
solar energy has shot up as the cost goes down. Global installed
capacity jumped by 28.4 gigawatts (one gigawatt is 100,000 megawatts) in
2012 to reach 89.5GW. The 100GW milestone will be crossed some time this
year. All this is good news for the fight against climate change. Now
comes the bad news.
The growing global demand has prompted the rise of solar panel
manufacturers, and the competition is fierce, with a number of companies
facing closure. China's biggest solar energy company Suntech is in
serious trouble.
But China has even bigger problems. The United States government,
receiving complaints from US solar panel manufacturers, has slapped high
anti-dumping tariffs on Chinese imports.
Now the European Commission also plans tariffs averaging 47% on
Chinese solar products which it claims are selling below cost. China is
taking these threats seriously. Premier Li Keqiang in a visit to Europe
last week took up the issue with European leaders.
Senior trade officials say China will retaliate. A full-scale trade
war is thus imminent.
In a surprise turn of events, Germany and 16 other European countries
have told the European Commission they are against its move.
But EC Trade Commissioner Karel De Gucht will apparently still slap
on the tariffs provisionally, which is within his power to do. So the
solar wars between China with Europe and the US will likely proceed.
This is a real pity, as the commercial interests of the countries are
coming in the way of rapid progress in solar energy and the fight
against climate change. The expansion of the solar panel industry in
China has played a crucial role in getting prices down, making solar
energy more and more competitive, and driving its explosive growth.
Yes, China subsidises and promotes its solar industry. But the US and
Europe also provide massive subsidies and supports.
The US has provided its solar companies with loan guarantees,
research grants and tax deductions including investment tax credits and
accelerated value depreciation. European countries have given subsidies
to consumers using solar energy, and incentives to producers including
through the feed-in tariff scheme, in which solar energy providers are
paid prices higher than what is charged to electricity users with the
price difference being met by governments. Without the subsidies, the
solar industry would not have grown. Trade protectionist measures taken
by one against the other, or by all against others, would be a recipe
for disaster - for trade, the solar industry and the environment.
Well known solar energy advocate and chairman of Solarcentury Jeremy
Leggett uses the following analogy to illustrate the trade war: "A
planet faces an asteroid strike. Its inhabitants manufacture rockets
with which to head off the threat. But, as the rock nears, they descend
into international bickering over who pockets what from rocket-making."
No one wins in this trade war, because of global solar supply chain,
explains Leggett. Solar ingots, the upstream feedstock, are mostly made
in Europe and America. The midstream products, cells and modules, are
mostly made in China.If China is hit on the mid-stream products it
exports, it could retaliate with tariffs on the upstream products it
imports.
For example, in Europe, the tariffs against China would wipe out
thousands of jobs because most are not in manufacturing but in the
companies that install the modules, regardless of where they are made.
The solution, he adds, is for the leaders of the few countries where
most solar panels are manufactured to make a deal that coordinates the
subsidies required in the various parts of the solar chain, and which is
required for the few years that some countries need to bring the price
of solar energy to parity with that of conventional energy.
An apt conclusion is made by Leggett: "The world will have to embrace
common security on a bigger scale.
Engaging in international competition while clinging to the illusion
that markets always work will never solve our common problems of energy
insecurity, poor air quality and resource depletion, never mind
development. We will keep on maiming industries that can save us."
- Third World Network Features.
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