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The Wacky World of Solar Subsidies


On Monday China announced new anti-subsidy tariffs on American-made polysilicon—a key component in solar panels. This marks the latest instance of a solar-producing country accusing another government of unfairly propping up the industry with state subsidies. China’s Commerce Ministry said America’s subsidized solar-grade polysilicon industry has caused China’s own polysilicon sector “substantial harm.” Reuters reports:

China’s Commerce Ministry said it would hit U.S. imports of the material used to make solar panels with relatively low duties of up to 6.5 percent, amid trade frictions in the struggling global solar industry.

That follows the ministry’s much heftier anti-dumping duties—used for goods sold below market value—of 53.3 to 57 percent on U.S. polysilicon in July, a move which many saw as a bid to protect China’s struggling domestic industry. Washington called those duties disappointing.

The EU, the US, and China all subsidize different levels of the solar panel production chain. Government dollars have created a global glut in solar panels (contributing to a quality control problem). They’ve also produced a highly distorted market. Europe accused China of dumping its panels over the summer and put a retaliatory tariff in place, sparking a trade war. For its part, the US levied import tariffs on Chinese panels last year to protect its own domestic industry. It’s a tangled mess of state-sponsored industries blaming other states for cheating by sponsoring industry.

While the tariffs and retaliatory tariffs are enough to make one’s head spin, they all point to one simple fact: solar energy is not ready to compete on its own merits. All of the money being spent on propping up an energy source that is, bottom line, more expensive than fossil fuel alternatives would be much better served going toward the research and development of more efficient solar technologies.

[Broken solar panel image courtesy of Getty Images]

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  • bpuharic

    Perhaps we should also reject farm subsidies, subsidies to TBTF banks, etc.

    Nah. That’s socialism, right?

    • ColoComment

      Yes. We should. Get rid of them all.

    • Brian O’Connor

      Why not?

  • crabtown

    Via Instapundit yesterday:

    FOR FIREFIGHTERS, solar panels are a new form of trouble.

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