China is winning the global race to the bottom in solar panels by propping up its producers, allowing them to dump their products on the world market at very cheap prices. But it isn’t just Beijing pumping money into green energy producers; the World Bank is financing Chinese firms as well. The Washington Post reports:
Bank programs have provided Chinese companies with direct loans to build their expertise and become more competitive; separately, World Bank contracts have provided tens of billions of dollars in business for Chinese firms that have won work from the bank at a pace unmatched by other countries.
For U.S. firms such as Solar World, the impact of bank programs in China became obvious as they watched imports from the world’s second-largest economy gobble U.S. market share.
We’ve chronicled the implosion of China’s Suntech, which at one point was the world’s largest panel producer. But plunging prices killed profit margins, and the company collapsed earlier this year. Sinovel, another Chinese green energy giant, is going through a process of retrenchment after overextending itself on cheap government dollars (or renminbi, as the case may be). Both companies have peddled underdeveloped products that couldn’t compete with fossil fuels, but they share something else in common: both have received direct support from the World Bank.
The global green energy web is complex and pervasive, and every level of production is being propped up somehow, including by the US. The Washington Post frames this as a story of the World Bank undercutting US interests by funding Chinese dumping, but the Bank’s error is more serious: it’s helping sustain technologies not ready for primetime. We’d be better off financing the research and development of more efficient panels and turbines, but the World Bank, like plenty of green policymakers around the world, has been lured by the siren song of renewable energy.
[Broken solar panel image courtesy of Getty Images]