China Develops New Energy Industries

Workers are busy on the production line of photovoltaic board at the plant of Tianwei Yingli Green Energy Resources Co., Ltd on June 24, 2009 in Baoding, China.

Trade sanctions on Chinese solar panels – established two years ago and broadened last week in a preliminary decision by the U.S. Department of Commerce – are a matter of fierce debate in the solar community. But given the results of a new study on the energy use efficiency and carbon footprint of Chinese solar, there might be a certain poetic justice to the new duties.

First on the trade fight: The latest Commerce Department decision came in response to a second round of unfair subsidy allegations filed by SolarWorld, the German company that has a big solar photovoltaics plant in Oregon.

The initial duties levied against Chinese companies were focused on purely Chinese solar cells. That is, they applied only to cells made in China or panels using cells made in China. But SolarWorld subsequently claimed that Chinese companies were skirting the duties – as had been predicted – by offshoring cell production, or significant elements of it, mainly to Taiwan. The Commerce Department agreed.

So preliminarily at least, duties ranging from 19 percent to 35 percent could now apply in cases involving solar cells made from “ingots that are manufactured in the subject country (or) wafers that are manufactured in the subject country, or cells where the manufacturing process begins in the subject country and is completed in a non-subject country” – the subject company being China, of course.

What does this mean for solar power in the United States?

Cheap solar panels from China have helped fuel a U.S. solar boom, and the fast-growing companies that install them say the broader duties, if ultimately allowed to stand, will raise the price of solar and slow its adoption.

SolarWorld, meanwhile, says such duties serve to level the playing field.

So you’ve got a classic trade argument. Do cheap panels offer a greater benefit to the United States than a protected solar manufacturing industry? Is there a danger to allowing solar manufacturing to concentrate in China? Does protecting SolarWorld from unfair competition save jobs? Or does it cause job losses elsewhere in the solar supply chain by reducing overall demand?

An assumption underlying the discussion, however, is that solar panels are mere commodities. But are they? Questions have been raised about the quality of some solar panels, and as Toddy Woody wrote in the New York Times last year, “most of the concerns over quality center on China.”

More than that, in a new study, U.S. researchers conducted life cycle assessments of panels made in China and Europe. They found that operating in Southern Europe, it would take 2.4 years for a monocrystalline silicon panel made in China to produce the electricity it took to manufacture the panel, while a European panel would take just 1.9 years. Related, they found that the energy return on investment – the amount of energy returned by the panel from each unit of energy invested in it – to be “much lower” for Chinese panels, 12.6 for mono-Si from China compared to 16.1 for panels from Europe. And finally, they found that such panels made in heavily coal-reliant China have a much higher carbon footprint – the CO2 equivalent of 72.2 grams per kilowatt-hour of electricity produced vs. 37.3 g/kWh.

All of the above more or less applies when comparing the Chinese panels to U.S. panels, too: “Certainly US-made panels would have an environmental advantage over those manufactured in China for the same reasons as those from Europe,” study co-author Seth Darling, from the Argonne National Laboratory, said in an email.

In the end, the researchers said that “though lower costs of Si-PV modules could be achieved in the overseas manufacturing scenario, the contribution to the risk of global warming is actually doubled.” Mind you, that’s doubled compared to homegrown solar panels, not the energy-production status quo; but still, it’s a significant difference. The researchers suggested a “break-even carbon tariff” could address the inequities.

More tariffs? No, different tariffs.

“This would be based on the carbon footprint and energy efficiency difference between manufacturing regions, and would be a better market- and science-based solution than a solar panel tariff,” co-author Dajun Yue said in a statement.