Solar trade war with China threatens U.S. jobs, exports
High tariffs on solar products from China could adversely affect U.S. companies, including those in Washington state, says guest columnist Tore Torvund.
Special to The Times
THE United States and China can still step back from the brink of a trade war that would devastate the solar industry worldwide, destroying thousands of high-paying American jobs and stalling the growth of environmentally friendly renewable energy.
That's the message of the U.S. Commerce Department's recent preliminary decision setting modest tariffs on some solar panels imported from China.
While the decision could have been much more damaging, it's only a shot across the bow. On May 17, the Commerce Department will release a second decision that could place a steeper tariff on some Chinese-made solar products.
While the controversy has been covered as pitting the Chinese and American solar industries against each other, it's not that simple.
First, in a thoroughly globalized world, it's hard to tell who's them and who's us. The Commerce Department acted in response to a trade complaint by SolarWorld, a German-owned company with a facility in Oregon. If the U.S. and China start building trade walls against each other's products, the winners will be the solar industries in other countries such as Germany and Japan.
Second, SolarWorld's sector of the industry — manufacturing solar panels — accounts for only about 5 percent of the U.S. solar jobs. About 52 percent of U.S. solar-industry jobs are in designing, installing, selling and maintaining solar-energy systems.
Largely driven by competitive prices, the affordability of solar energy has encouraged the growth in business investment and jobs in the great majority of the industry. As the price of solar energy has fallen by about 30 percent, the U.S. solar industry has grown, adding another 7,000 jobs last year, for a total of more than 100,000 nationally, and expecting to expand by another 24,000 jobs this year. Here in Washington, the industry has an estimated 2,300 employees — the 12th-largest solar workforce in the nation.
By raising prices for solar energy, the proposed tariff would reduce consumer demand, delaying new hiring and destroying existing jobs. According to the respected economic consulting firm the Brattle Group, special tariffs on imported solar panels would result in the loss of up to 32,712 jobs related to the solar industry in 2012, 40,593 by 2013, and 49,589 by 2014.
Thirdly, while much of the opposition to the proposed tariff rightly stresses the harm to end users of solar products, many American companies and workers produce the materials and machinery that are used to manufacture solar cells and modules.
If substantial tariffs are imposed on solar panels from China, companies such as mine that produce the materials that are used to manufacture solar cells and modules would also take a hit. Not only would we suffer from the ripple effects of a declining market for solar-energy systems, but the Chinese government might well welcome the excuse to impose a tariff on imports of the polysilicon that we produce at lower costs and higher quality than any Chinese company.
Because of the new uncertainty in the industry, my company recently slowed down investment plans in its new generation of proprietary technology, freezing a proposed investment of approximately $1 billion in new capacity here in Washington, where we already employ some 550 workers. Other companies in every segment of the industry may also hedge their bets.
The U.S. and Chinese governments should not destabilize solar markets and disadvantage all industry participants by adding artificial costs and unnecessary trade barriers. The future of the solar industry, its growing workforce and its economic and environmental benefits all deserve better.
Tore Torvund is CEO of REC Silicon, a U.S. producer of polysilicon for solar panels and modules, with facilities in Moses Lake and Butte, Mont.