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Daunting challenges ahead for Chinese solar companies

By Tom McGregor ( Updated: 2012-11-09 15:50

Daunting challenges ahead for Chinese solar companies

Manufacturing solar panels are costly endeavors even in countries that enjoy low labor costs such as in China. Consequently, solar companies from all over the world appear to need help with either subsidies or special government loans.

Meanwhile, eco-friendly companies tout a cleaner environment as good incentive to produce alternative energy resources that include windmills, hydroelectric dams and solar panels. Yet, environmentalists have already noticed a few flaws to the strategy.

To cite wind energy as an example, some critics have pointed out that windmills are noisy, obstruct the view of natural landscapes, its spinning rotors have killed birds in flight and its only effective on windy days.

These complaints would infer that there's no true unity with promoting "Green Energy" among eco activists. Even solar energy has ignited controversy over whether solar panels should be sold cheap to encourage more buyers or sold at higher costs to protect American jobs.

US-based companies have taken sides on the topic. Oregon-based SolarWorld filed a complaint with the US International Trade Commission and called for higher tariffs against Chinese solar companies claiming they are harming American solar companies by selling cheaper products.

The complaint has proven successful. "The US will soon impose tariffs on imported Chinese-made solar panels after decision by a US trade panel Wednesday, escalating a trade spat that until now was based on preliminary taxes on imports," according to the Wall Street Journal.

It added, "the US International Trade Commission found, in a 6-0 vote, that US solar-panel makers had been injured by illegal dumping from Chinese competitors, clearing the way for the Commerce Department to order tariffs."

"Chinese companies that export billions of dollars of solar products to the US each year will face tariffs of up to nearly 250 percent," as reported by the Edmonton Journal.

"The Obama administration imposed those tariffs in October after finding that China's government is subsidizing companies that are flooding the US market with low cost products – a tactic known as 'dumping.' Wednesday's vote means that those tariffs, along with anti-subsidy fees of up to 16 percent, will stand."

However, higher tariffs do not necessarily guarantee more American jobs. "Made in the USA" green goods are more expensive due to higher labor costs that must comply with tough labor union laws, stringent factory regulations and higher business tax rates.

Each state has different tax rates and business laws to contend with. SolarWorld operates in Oregon, which has higher state taxes and tougher regulations than in a state such as Texas, which is considered to be more business-friendly for factory owners.

One could make the argument that a negative business climate is more to blame for the faltering balance sheets of some American solar companies.

After higher tariffs go into effect, potential customers may still decide against purchasing solar panels since the overall economy continues to sputter. "Green Energy" is a good concept, but ineffective when it means paying for alternative energy resources that has become unaffordable.

Higher tariffs won't improve the environment either. Americans had been more likely to buy cheaper Chinese-made solar panels, while it significantly reduced carbon emissions. Perhaps, a surge of "green inflation" is imminent.

Jigar Shah, who founded the Coalition for Affordable Solar Energy (CASE), criticizes SolarWorld for demanding American consumers pay for more expensive green products.

"I don't think (China) is trying to put us out of business," Shah told the AltEnergyStocks news Website. "We never had a vibrant solar manufacturing industry anyway, but if they are providing us with panels at a very affordable cost and there allowing us to de-carbonize our grid, I'm just trying to figure out how this is a bad thing for all of us."

Hence, environmental activists in the US have a few questions to answer: Do they want to reduce carbon emissions overall with China's help? Or do they only seek to build "Made in the USA" eco-friendly companies, and enforce trade barriers against Chinese companies? How can higher tariffs really help the environment?

The views do not necessarily reflect those of China Daily.

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