EU launches solar panel probe into Chinese ‘dumping’ claims
The European Commission has initiated an anti-dumping investigation into the import of Chinese solar panels and key components such as solar cells and solar wafers, a Commission statement said on Thursday (6 September).
Beijing voiced "deep regret" at the move and warned that restrictions on its solar exports could imperil the global clean energy sector.
"Restricting China's solar panel products will not only hurt the interests of both Chinese and European industry, it will also wreck the healthy development of the global solar and clean energy sector," said Shen Danyang, a Chinese Commerce Ministry spokesman.
He added that “friction” between the EU and China should be resolved through “consultations and cooperation".
The investigation into one of the biggest import sectors ever targeted by the Commission stems from a complaint by a group of European solar companies, led by Germany’s SolarWorld.
The group, comprising members in Germany, Italy, Spain and other EU countries, says Chinese solar firms have been selling panels below their market value in Europe.
SolarWorld representatives first warned of an impending European suit in an interview with EurActiv in October 2011. The following Spring, the company began forming a European coalition modelled on its successful US lobby group.
In March, the head of the EU trade commissioner Karel De Gucht's cabinet, Marc Vanheukelen, gave the alliance hope with a drum-banging speech in Brussels.
“We should use all the tools we have at our disposal to tackle barriers that distort the market,” he said, with reference to China's solar panel exports. “We may take to court countries that we don’t think are playing fairly,” he added.
Just weeks later, the US imposed duties on solar panel imports from China.
Trade war fears
China's solar firms warned in July of a trade war, calling on their government to strike back against the impending investigation.
Chinese producers include Yingli Green Energy, Suntech Power Holdings Co Ltd, Trina Solar Ltd and Canadian Solar Inc.
The Chinese solar industry expanded rapidly on the back of profitable exports to Europe but is now struggling with severe overcapacity as export markets have shrivelled and domestic demand remains insufficient.
About 60% of China’s exports of solar panels and components – with a value of €21 billion - went to the EU in 2011.
Overall, the EU imported €292 billion of goods from China last year, of which less than 1% was subjected to trade defence duties.
Brussels will now examine whether dumping is taking place, whether it is damaging EU industry and whether duties would harm the EU's economic interests.
Some Western solar firms have been at odds with their Chinese counterparts for years, alleging that they receive lavish credit lines from their government to offer modules at cheaper pricing.
German solar company Q-Cells became the most prominent EU victim of an increasingly competitive market, filing for insolvency in April.
But Europe’s solar industry is divide on wisdom of anti-dumping measures against China, with the European Photovoltaic Industry Association (EPIA) lauding Chinese imports for lowering the price of solar energy, and helping the EU meet its 2020 renewable energy targets.
“Without global competition and cheap Chinese PV modules, we wouldn’t be as close to grid parity as we are today,” Reinhold Buttgereit, EPIA’s secretary-general told EurActiv in April, refering to the point where renewables become cost-competitive with fossil fuels.
The Commission will now send questionnaires to the Chinese exporters as well as to EU producers and importers and make a recommendation to EU members. They have within 15 months of the opening of the investigation to impose any duties, which are generally in place five years.
The International Energy Agency has predicted that solar could provide “a third of the global final energy demand after 2060”.
But despite its huge promise, solar currently provides less than 1% of energy sold globally, in part due to its variable nature and low intensity. The main reason for this has been difficulties exploiting the resource on a large scale and at a competitive price.
Solar electricity will become attractive when it falls below "grid parity," the point at which renewable energy becomes cost-competitive with conventional sources like fossil fuels. Europe is nearing this point.
Favourable regulatory regimes and rapid technological evolution in the industry helped the sector to get onto its feet quickly. But many in the industry now fear that the sudden removal of tariffs, often retroactively as seen in Spain, is damaging future growth prospects, particularly in Europe.
Trina Solar, one of the Chinese companies under the microscope in the EU's probe reacted indignantly to the EU's announcement. “Trina Solar products are neither dumped nor subsidized," said the company's CEO, Jifan Gao. "They are produced, and sold competitively on the European market. We believe the trade investigation will reveal that Trina Solar competes fairly with its competitors in the European Union” .
“We are cooperating with the European Commission to ensure it receives all required information to arrive at a balanced and fair conclusion," he added. "Additionally, we welcome Chancellor Merkel’s constructive approach to a dialogue and are ready to participate in any dialogue which may be initiated,” said Ben Hill, President of Trina Solar Europe."
"China must realise that if it wants to do business with the EU it must play by the rules," said Robert Sturdy MEP, the vice-president of the European Parliament's International Trade Committee. "I have sympathies with Chancellor Merkel on this issue. It is essential that the EU does not jump headfirst into legal action without first pursuing other options such as a negotiated settlement." "If the first step we take is one of legal action then we risk descending into a tit for tat exchange," he warned. "The EU should do everything in its power to avoid solar wars with China, but it must also be prepared to defend the level playing field on which free trade must operate. The ball is now in China's court to show that it wishes to play by the rules of the international trading system. The EU should now extend an olive branch to China, but it must hold a set of legal spears ready in its other hand."
"The European Commission has decided to open an antidumping investigation into Chinese solar imports into the EU. EPIA, as the voice of the global PV industry in Europe, hopes that it can be conducted quickly," said EPIA's president Winfried Hoffmann. "The PV industry faces challenges in these difficult economic times by many aspects. But as our industry matures and becomes competitive in many more markets, the global market will grow for a long time to come. We need to move beyond destabilising trade conflicts and work together to respond this global demand for clean, renewable and safe electricity." "Whatever the outcome of the EU investigation, Europe needs a strong PV industry along the whole value chain; this is vital for maintaining a viable European market for PV. That means the EU needs to develop a real industrial policy that would encourage and strengthen further investments. In the meantime, we at EPIA will keep working hard on behalf of our global membership. Our mission, as always, is to push for policies that allow PV to deliver on its promise as a major contributor to meeting Europe’s energy, environmental and economic goals for the coming decades."
The Alliance for Affordable Solar Energy warned that any trade dispute could threaten thousands of European jobs. “Free trade was one of the factors that enabled the European solar industry to become a fast growing sector," said Thorsten Preugschas, CEO of the German operating project development company and AFASE affiliate Soventix. "At a time when European governments are scaling back their subsidies for solar energy, trade barriers would push up costs and damage, possibly beyond repair, the competitiveness of solar power. Therefore, we call on the EU Commission to bear in mind the severe damage punitive tariffs would bring to the whoe European photovoltaic sector.”
- Dec. 2013: Deadline for imposition of duties on China, following the EU's investigation