More than 1,000 firms demand end to EU-China solar trade war

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The extent of the split within the European solar industry over proposals for Brussels to impose tariffs on imported solar panels from China was laid bare yesterday, when it emerged that over 1,000 companies from across the industry have written to the European Commission warning import duties could have a grave impact on the industry.

The European Commission recently launched an anti-dumping and anti-subsidy investigation against Chinese solar manufacturers, after European solar manufacturers lodged a series of complaints alleging that Chinese rivals were benefiting from unfair subsidies.

Speculation is now mounting that the EU could follow in the footsteps of the US and impose import tariffs on Chinese solar panels, while also pursuing a complaint to the World Trade Organization about Chinese government subsidies.

Predictions the Commission could impose tariffs were given further credence last month, when it ordered customs officials to keep a record of the number of Chinese solar panels being imported in order to allow for retrospective levies to be imposed.

But while European and US solar technology manufacturers would welcome such action, installers and prospective purchasers of solar technology are increasingly concerned that such a move will drive up the cost of solar panels, leading to a slowdown in the deployment of the technology and job losses across the industry.

Now the Alliance for Affordable Solar Energy (AFASE), a coalition of over 350 companies opposed to introduction of import tariffs, has orchestrated a letter signed by 1,024 companies that warns of the potential negative impacts of any protectionist measures.

The letter, addressed to European Trade Commissioner Karel De Gucht, argues the problems faced by European solar manufacturers are more the result of over-capacity in the global solar market caused by the economic slowdown than competition from China.

It also warns that "the imposition of anti-dumping and/or countervailing duties will severely hamper the growth of solar energy in the EU to the detriment of the entire EU solar PV value chain and without significant positive effect for the EU solar producers".

"All experts emphasise that photovoltaics will exit from the current bust cycle by continued cost cutting through cost rationalisations and economies of scale thereby sustaining and increasing demand," it adds. "We are convinced that it is precisely this inability to sufficiently cut costs at a crucial stage in the industry's development which has injured EU producers but it could also be the avenue forward for their success. Imposing additional duties is in blatant contradiction with the decrease in costs that is needed for the industry to survive."

The International Energy Agency has predicted that solar power 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.

  • Dec. 2013: Deadline for imposition of duties on China, following the EU's investigation

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