The Biden administration's green industry policies have been put to the test in the past year. Even with subsidies and tariffs, U.S. solar manufacturers are struggling to keep up with the flood of cheap solar panels from China entering the global market. While some believe the United States should ease restrictions on cheap Chinese solar panels to speed up the adoption of renewable energy, this approach is not sustainable.
2023 has been a difficult year in the race to develop renewable energy. In the United States, publications have been hampered by high interest rates, delays in developing tax-exempt guidelines, and a permitting project in dire need of reform. However, solar power is a bright spot, accounting for three-fifths of the world's new renewable electricity capacity. According to the International Energy Agency, solar energy is the only renewable technology growing at the pace to meet net-zero emissions targets by 2050.
If this trend is good news for the climate, it is even better news for China. Just ten years ago, China supplied 40% of the world's solar panels. Today its share in the world market exceeds 80%, it is practically a monopoly.
It's no coincidence that China is benefiting from the solar boom. In the mid-2000s, the Chinese government invested hundreds of billions of dollars in the renewable energy sector, focusing on what officials have since called the "new big three": electric vehicles, lithium batteries and solar cells.
Highly integrated supply chains, innovative manufacturing technologies and continued government support have fueled the growth of China's solar industry. The same goes for the huge domestic market: China has nearly four times the installed solar capacity of the United States, the world's second-largest market. But the Chinese solar industry's ambitions go beyond saturating the world's largest energy-consuming economy, China. China's solar energy exports increased 34% in the first half of 2023 from a year earlier.
China's solar industry has played an important role in accelerating the global expansion of renewable energy. But that green patina hides a darker truth.
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The connection between China's solar industry and the Chinese Communist Party's persecution of the Uyghur ethnic minority in Xinjiang has been well documented. Between one-third and one-half of the world's polycrystalline solar energy production occurs in the Xinjiang Uyghur Autonomous Region. The United States has limited direct imports of solar energy from China, for example through the Uyghur Forced Labor Prevention Act and tariffs imposed to protect American industries from dumping and anti-competitive practices. However, many solar modules assembled in Vietnam, Thailand and Cambodia, the largest sources of solar panels in the United States, use Chinese components. Today, most of the solar modules produced in the world come from the Uyghur region.
Although Chinese solar panels can produce energy without carbon emissions, the production of these panels is not environmentally friendly. Coal, the dirtiest fossil fuel, accounts for the majority of China's electricity production. In the Xinjiang Uyghur Autonomous Region, where polysilicon refining is the most energy-intensive step in the solar panel manufacturing process, coal accounts for 77% of electricity production. As a result, a recent study found that solar panels made in China produce 30% more greenhouse gas emissions than if the supply chain had returned to the United States.
Additionally, China's continued dominance in solar energy threatens the security of the United States and its allies. In 2021, the European Union depended on Russia for almost half of its total natural gas consumption. The European Union paid a high price for entrusting energy security to Vladimir Putin. Although some environmentalists argue that renewable energy cannot be weaponized like fossil fuels, this is very naive. Today, Europe is the destination of more than half of China's solar energy exports. Once again, our European allies are trading security for cheap energy. The United States must not make the same mistake. Although the dynamics of the exchange of solar modules and fossil fuels are different, the complete dependence of a country, especially on a hostile country, poses a real security threat.
Critics of the Biden administration's green protectionism say excluding cheap solar panels from China is slowing the energy transition. This may be partially true. However, even if Chinese solar panels are 20% cheaper than American ones, this figure does not determine the success or failure of the American solar industry. The problem of high interest rates and a prolonged recession also needs to be addressed.
There is no end to China's dominance in the global solar energy market. He's off to a great start. However, the United States must work to unleash China's power. Incentives for domestic clean energy production in FRA are just the beginning. The Biden administration could also reimpose tariffs on Chinese solar components sourced from Southeast Asian countries. It could also put pressure on the European Union and other allies to take a stronger stance against anti-competitive behavior and human rights abuses by Chinese solar companies. Finally, the Biden administration should work with allies like India to increase solar energy production capacity by reducing labor costs.
This strategy may slow down the spread of solar energy slightly. However, the alternative of China maintaining a global monopoly on solar energy comes at a cost.
The toxic cost of going green | The Unspoken World
