A few days ago, seven American solar panel makers filed a lawsuit against the Chinese solar panel industry for using billions of dollars in government subsidies to help gain sales in America. The United Steelworkers union and the American Federation of Labor, both of which have huge business interests in the construction of wind turbines and other such equipment in the renewable energy sector, have also filed similar complaints against Beijing. This incident has revealed the true meaning of the pursuit of a remedy for global warming and climate change.
Although greenhouse gas emissions per capita in China is only one-third of that in the United States, its total emissions surpassed that of the U.S. in 2006, making it the country with the highest emissions in the world. China’s continued efforts to develop renewable energy to meet its rapidly increasing demand in electricity will no doubt help lower the growth rate of global greenhouse gas emissions. In fact, China has invested heavily in renewable energy in the last few years; this resulted in dramatic improvements in related equipment, which greatly lowered the cost of solar and wind energy. On the other hand, although the U.S. market in solar energy has surged, the industry itself is facing collapse. Despite the industry’s complaint [against Chinese subsidies for its industry], Solyndra LLC still had to declare bankruptcy after receiving a $500 million loan guarantee. SolarWorld, one of the largest in the solar panel industry, recently closed down its factory and fired 150 employees in Ohio.* The industry has long relied on Europe, the biggest market for solar panels; but it is now struggling as it is not getting returns on initial capital with the increased supply from China and other Asian countries driving down prices.
Even though there are conflicts between China and America in the energy market, collaboration can still be found, mainly in government-funded programs such as the U.S.-China Clean Energy Research Center and partnerships to unify energy-efficiency standards. In 2010, half of the clean energy equipment installed in China was from foreign companies such as the American company General Electric (GE). The trade war started by the American manufacturers will definitely affect manufacturers in other countries. It also gives people the impression that America does not really support China’s effort to improve the global environment.
In mainland China, 70 percent of the total energy and 80 percent of the electricity produced were powered by coal. As the demand for energy skyrocketed, China paid an unprecedented environmental and public health price. From now on, improvements in energy efficiency and renewable energy are the only way for China to ensure its economic growth, energy security and environmental quality. On the other hand, 49 percent of America’s electricity was derived from coal in 2010. In 2009, when a trade deficit was recorded, crude oil accounted for 38 percent of America’s electricity. Hence, both countries have set development of clean energy as their main priority. The example of China has already proven how renewable energy can become the world’s mainstream energy system once it is broadened and utilized to its full potential. Meanwhile, the United States can use its highly efficient research system to provide essential support to other countries.
Looking back, there are concrete examples of how the collaboration between China and the United States can create a competitive environment with conditions that are beneficial to the clean energy industry and social welfare. For example, First Solar, an American solar panel company, reached an agreement with the government of Ordos City, Inner Mongolia, to build the largest solar farm using the latest technology in solar energy. Suntech, a Taiwan-based company, will soon build a solar panel plant in Arizona, in the United States to reduce production time, cost and emissions while creating hundreds of job opportunities. Another area that would be ideal for collaboration is smart grid technology. By combining the technology of America and the market in China, the basic essential facilities desperately needed by power plants for transmission, distribution and storage can be developed. As a matter of fact, GE, the State Grid Corporation of China, and Chinese Academy of Sciences signed a Memorandum of Cooperation not long ago to jointly develop smart grid standards.
The American solar panel industry would rather that Chinese government subsidies go directly to the consumers instead of equipment manufacturers. However, as the latest price of clean energy such as solar energy is still much higher than the current consumption level in China, it remains a luxury that only the rich can afford. In fact, judging by the progress made in the past 10 years, China’s rapid growth in wind and solar energy was the result of the rapid localization of related foreign technology.
With its business profits at stake, it will be difficult to stop America from filing similar complaints against China, as the one mentioned in the opening [of this article]. It is uncertain whether President Obama will support the lawsuit during the congressional election. However, China and America should strengthen their ties on renewable energy, as it is welcomed by everyone pursuing sustainable energy and it is essential to the mutual benefit of related industries in both countries.
*Editor’s note: SolarWorld actually shut down a plant in California, laying off 186 workers and shifting production to its headquarters in Oregon.