Does It Matter Who Makes Solar Panels?

The price of solar panels is dropping fast, and China’s investments in renewable energy have a lot to do with that—a little too much, according to seven American solar panel manufacturers. Led by SolarWorld, the seven companies filed a trade complaint this week with the Department of Commerce and the International Trade Commission, alleging that China had surpassed limits on how much subsidy money could fund its export-driven solar industry, and that the country was “dumping” panels—selling them for less than the cost of manufacture and shipping—in foreign markets.

One of frequently-cited tropes about the clean energy market is about the race between China and United States to dominate the market. Countries like Germany, where the clean energy sector is growing, worry about competition from China, too. It’s clear why American or German solar manufacturers might worry about low-priced solar panels coming from overseas. But for the rest of us, does it matter who makes solar panels? Whether they come from China or America, cheap solar panels mean more solar energy and less carbon being dumped into the atmosphere.

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Asking this question cuts to the heart of an important agenda item for American progressives: green jobs. The idea that solving climate change can also help solve economic problems brings together environmentalists and unions, two traditionally liberal constituencies. But what if one of the most effective strategies for tamping down carbon emissions—installing more solar power as quickly and as cheaply as possible—works best when the panels aren’t made in America?

In a way, this is a classic free trade problem. By opening up competition across international borders, workers lose out, while consumers reap the rewards. In this case, not only do individual consumers benefit from cheaper solar panels, but the country enjoys an electricity system that generates less pollution.

On the other hand, competition pressure from China has contributed to the closure of more than one American solar company. With the economy in the dumps, the “jobs” part of “green jobs” is especially important. But most of the jobs in the solar industry aren’t manufacturing jobs, according to a report from The Solar Foundation [PDF]. Last year, about 47 percent of solar jobs were in installation, about twice as many as in manufacturing. Installation jobs are also growing more quickly, in large part because cheaper solar panels have made solar power a more attractive investment for homeowners and businesses. The solar industry is divided over the trade complaint, as well: Executives who sell silicon and solar panel manufacturing equipment to Chinese companies are worried the complaint could harm the industry as a whole.

The most important priority right now is to ensure that clean energy projects keep happening. Policy solutions like cap-and-trade have zero chance of becoming law right now, in part because of the uncertain effects they'd have on the economy. Meanwhile, the amount of carbon in the atmosphere is still increasing, with little concern for anyone’s job prospects. So if China's only offense is making solar panels more cheaply than American companies can, it's not worth a fight: American solar manufacturers might lose out, but the rest of us will benefit.

Photo via (cc) Flickr user Walmart Stores