When I helped Governor Arnold Schwarzenegger create the Million Solar Roofs Initiative in California a few years ago, we designed it to stimulate mass production of solar panels to bring down cost. What we didn’t anticipate was that the building industry would crater around the same time, and that unemployed roofers and electricians would then find new jobs installing those clean energy systems, which created competition and dramatically lowered installation costs.
In fact, about 60% of the cost of installing a rooftop solar powerplant is tied up in the American parts and labor other than the solar panels themselves. I emphasize the "Made in America" portion of this industry because the majority of solar panels are made in China, but you can’t outsource the job of the worker on a rooftop in Fresno, New Orleans, or Trenton. Those jobs are powering an important sector of the U.S. economy right now, in an industry that is still lagging behind the slow economic recovery.
Why does this matter? Because the U.S. Department of Commerce recently imposed new tariffs on Chinese solar panels, ranging from 31% to 250% and effectively killing the goose that is laying golden eggs on American rooftops. It did so in an over-reaction to complaints that China subsidizes its panel exports, giving them an unfair advantage over U.S. manufacturers. While it may be true that the few, struggling U.S. solar panel makers need help competing with the many foreign competitors, sending American construction workers back to the unemployment line is hardly the way to level the playing field.
I just spent a week in China and visited with government officials and solar companies. Chinese solar panels out-compete those of other nations for all the obvious reasons: cheaper labor, rents, and raw material costs. They also lower prices because of stiff competition from other Chinese manufacturers; one official told me there are over 1,000 companies producing components for various kinds of solar products in China today. All of this adds up to the same reason we buy everything from plastic lawn flamingos to Nike sneakers from China, not because of sinister government subsidies designed to put American workers out of a job.
Let’s also recall that the U.S. government subsidizes everything from American solar panels to pork rinds by its multi-billion dollar giveaway of our tax dollars to the oil industry. In Lives Per Gallon: The True Cost of Our Oil Addiction I calculated the real price of gas or diesel to be around $6 more than we pay at the pump, thanks to tax breaks, defense of oil around the globe, and health care costs related to petroleum air pollution. How ironic that we are "protecting" the solar industry in the name of clean energy and fair competition by effectively killing it with a misguided tax and massive subsidies of fossil fuels.
And we had better get smarter about these policies soon. Japan and Germany are turning off their nuclear power plants, while one of the two in California is currently shut down for unexplained leaks in cooling pipes. Energy officials estimate that the state will survive a hot summer without the plant only because of the massive addition of solar and other renewable energy resources in the past decade, a trend that will slow significantly if solar panels become more expensive as a result of our own government’s myopia.
If China is subsidizing solar panels, let’s thank them and ask them to do more. The cheaper those panels are, the more Americans will go back to work installing them all over the country, making us less dependent on borrowing from countries like, uh, China, and less dependent on fossil fuels that foul our lungs and threaten our national security. Seems like a good deal to me.