‘We can’t close our borders’: Harsh solar industry protectionism off the table

Tariffs on Chinese solar panels look to be off the table as EU countries look towards drafting a declaration of support to their domestic solar industry while turning away from past measures like anti-dumping tariffs.

In 2023, the EU installed 56 GW of solar panels, an all-time high. Meanwhile, Europe’s remaining players in the solar industry supply chain are being squeezed by cheaper Chinese panels – a concern of politicians like the German Vice-Chancellor Robert Habeck, who strives to maintain a base level of European production.

Some industry players make a case for a second round of anti-dumping tariffs, which increasingly appears off the table. “We can not close our borders,” stressed Energy Commissioner Kadri Simson ahead of a working lunch with EU countries on Monday (4 March).

During the lunch, EU countries are set to discuss the issue and agree on a way forward. “We have been benefitting a lot from the record rate of installations,” Simson explained, adding that “supporting our industry” would need to be done while ensuring that “all products” continue to be available “to meet our ambitious 2030 targets.”

Berlin was set to put a proposal forward at lunch, but “trade measures are not needed”, explained Germany’s Sven Giegold, state-secretary at the ministry of economy and climate action. 

Instead, he favoured the adoption of “resilience criteria,” like fencing off a share of state-supported auctions for solar panels made in Europe or Germany.

Simson and her French colleague, Internal Markets Commission Thierry Breton, spelt out their preferred options in a letter addressed to Belgium’s energy minister, Tinne Van der Straeten, last week.

The two propose that EU countries sign up to a voluntary declaration, a European solar charter, similar to the one signed in December 2023 for the wind industry. 

There, EU countries could sign up for a toolbox of light-touch measures like auctions designed to favour “made in Europe” solar panels, mandate that the state prioritise domestic producers via public procurement, build incentive schemes for more obscure forms of solar – solar panels on farmland, where EU producers have an edge.

Industry players, like wholesalers, may commit to including EU-made solar panels in their catalogues or boost their manufacturing capacity as a sign of goodwill to policymakers.

Until then, Brussels has reminded EU capitals that state aid rules were loosened for industries like solar, making it easier to direct state aid towards firms being tempted away by schemes like the USA’s Inflation Reduction Act.

Any sort of trade measure is notably absent. “It doesn’t refer to trade measures, which we welcome. Rather, it focuses on making the best use of existing policies for resilience,” says Dries Acke, policy director at industry association SolarPower Europe – with both European and Chinese members.

The declaration is expected to be drafted by the Belgian EU presidency and could be signed by EU countries – following the usual back-and-forth deliberations – at the sidelines of an upcoming energy ministers’ meeting.

Beyond that, the outgoing European Commission is kicking the can down the road. “ I would also suggest that we re-visit this topic in the second half of the year,” reads the letter.

[Edited by Alice Taylor]

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