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John Daly

John Daly

Dr. John C.K. Daly is the chief analyst for Oilprice.com, Dr. Daly received his Ph.D. in 1986 from the School of Slavonic and East European…

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China Solar Manufacturers Decry U.S. "Dumping"

The western press increasingly portrays China’s energy policies as omnivorous, circling the globe to acquire any and all energy assets to feed China’s booming economy.

But this picture is overly simplistic, as authorities in Beijing are scouring the country to provide any and all exploitable energy assets, including those beloved of environmentalists worldwide – renewable energy resources.

As an indication of the government’s seriousness, Beijing has recently committed an extraordinary $49 billion into national investments into solar power and wind, biomass and geothermal projects, assisted by government-backed stimulus packages. Current Chinese government energy policy legislates that non-carbon energy renewable resources are to comprise up to 15 per cent of the country's energy production by 2020, an ambitious goal by any measure.

Adding to the government’s embrace of renewable power is the 11 March nuclear disaster at Japan’s Daichi Fukushima Tokyo Electric Power Company (TEPCO) six reactor complex. Prior to the catastrophe nuclear energy was a prime element in ensuring China's emerging energy policies to meet the country’s rising energy needs but since then the government has been forced to partially reconsider its options.

Furthermore, China in its latest twelfth Five-Year Plan, 2011 – 2015, laid out ambitious targets to reduce greenhouse gas emissions, seeing renewable energy sources as both reducing greenhouse gas emissions and advancing more efficient energy consumption patterns, with the final net result of fostering the development of Chinese industry.

Last year data confirmed that China was the world leader with its $48 billion commitments in new renewable energy projects, which represented an increase of 28 per cent over 2009 figures. Last year China added 17,000 megawatts of new energy from renewable sources to its national energy grid. Today, China now has the largest wind capacity in the world, ten times the capacity of Denmark, a country that largely pioneered wind turbine energy farming. Furthermore, China's solar manufacturers have benefited from large government debt financing deals, with Beijing extending loan guarantees worth $32.5 billion to the country’s top 10 solar manufacturers, giving China overall roughly 50 percent of the global manufacturing market for photovoltaic (PV) modules, used both locally and internationally to generate electricity from the sun.

But China’s ramping up its solar facilities, of which a valuable component is exports, is already drawing international scrutiny, particularly in the U.S. where fledgling solar companies are apprehensive that a recent U.S. government trade complaint filed against China could trigger retaliation. Raising fears, on 25 November the Chinese Ministry of Commerce announced that it was opening a major investigation of American policies that it says may have impacted the development of solar, wind and hydro industries in China, which will be ruled upon by 25 May 2012.

An alliance of Chinese polysilicon makers accordingly is petitioning the central government to file anti-dumping claims against rival American polysilicon manufacturers, alleging that U.S. polysilicon manufactures have "encroached on China's polysilicon business, forcing companies to cut or halt production, and resulting in bankruptcies and job losses," noting that 60,000 tons of polysilicon is expected to be imported into China in 2011, up from 20,000 tons in 2009.

Stripped of rhetoric, the dispute revolves around the fact that, led by Chinese production, the global price of PV modules per megawatt has shrunk by an average of 60 per cent since 2008 and for the first time has put solar energy on a competitive footing with the retail price of electricity in many energy-poor but sunny countries.

Chinese PV manufacturing companies allege that current U.S. measures "violated the United States' commitments under World Trade Organization rules, and are an unreasonable barrier and restriction on China's renewable energy industry, reducing the competitiveness of Chinese products in the U.S. market."

The issue is now being kicked upstairs, with China’s Ministry of Commerce stating on its website, "The Ministry of Commerce has decided to initiate a trade barrier investigation into policy support and subsidies for the U.S. renewable energy sector."

For those with a sense of irony, U.S. imports of solar panels from China rose to $1.5 billion in 2010 from $640 million in 2009.

In light of the recent collapse of U.S. solar manufacturer Solyndra and the lopsided U.S. –China trade imbalance, Chinese claims of unfair U.S. trade practices are beyond surreal.

By. John C.K. Daly of Oilprice.com




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