There Goes the Sun

The EU, is threatening to impose anti-dumping duties on Chinese solar panels. But a new tariff war offers no way out for an industry that is already in distress and in which everyone – Europe, China, and the environment – stands to lose.

PARIS – The solar industry is in disarray, with companies closing down worldwide and the rate of solar-panel installation slowing. Now, the European Union, claiming that solar panels from China are being sold below cost, is threatening to impose anti-dumping duties. But can new trade tariffs really offer a way out of the current situation, in which everyone – Europe, China, the photovoltaic (PV) industry, and the environment – stands to lose?

In fact, the EU has already imposed a provisional duty of 11.8%, which took effect on June 6. Unless Chinese and EU officials reach an alternative agreement by August 6, the duty will rise to 47%. Such a rate would undermine further the proliferation of solar power, a key feature of strategies for enhancing energy security and reducing greenhouse-gas emissions.

The PV industry’s current predicament stems from a legacy of government subsidies and cheap credit. Until recently, Europe was encouraging the installation of solar panels by guaranteeing feed-in tariffs for the electricity generated, while China provided strong incentives to stimulate the growth of its PV industry.

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