Blinded by the (Solar) Light: Op-Ed by Prof. Kelly Sims Gallagher

Financial Times

Kelly Sims Gallagher

The Obama Administration’s preliminary decision to impose a 31 per cent tariff on solar panels imported from China is short sighted. The move could cause a trade war, hurt the US economy, jeopardize US security interests, and put the world further off course in terms of meeting its global climate change goals.

The decision opens the US up to a trade war in renewable energy, of all things. The US currently has a trade surplus with China in solar energy because of large US exports of poly-silicon to China. Not surprisingly, Li Junfeng, a senior Chinese government official, has already proposed imposing retaliatory tariffs on US polysilicon—and a trade war might not stop there.

The measure could also hurt one of the few bright spots in the US economy. Jobs in the solar sector grew by 7 per cent last year thanks to the combination of higher demand for solar PV (due to lower prices for the modules) and state and national incentives for renewable energy. Most of the new jobs are in the solar installation business. If the Obama Administration makes solar modules one-third more expensive by imposing these tariffs, US demand for solar PV will certainly fall, and new jobs in this sector will vanish. Chinese solar firms can shift their production to other countries to avoid the tariffs, and will still be more competitive than SolarWorld—the German company whose US subsidiary is behind the complaint.

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