EU trade bodies attack plans for tariffs on cheap Chinese solar panels

Solar prices will soar and demand will plummet if the EU presses ahead with tariffs on cheap PV panels from China, warn industry groups

Europe’s leaders face an industry backlash over plans to impose duties on Chinese solar products, with critics arguing the move will push up prices for consumers and drive down demand.

The EU commission reportedly agreed last week to press ahead with controversial plans to impose duties of up to 67.9% on Chinese-made solar panels in response to so-called “dumping” of cheap Chinese solar products in the European market, though no formal announcement has been made. More than 100 Chinese companies are expected to be affected, according to Bloomberg

The number of Chinese solar panels manufactured each year quadrupled between 2009 and 2011, pushing down prices and posing a serious challenge to manufacturers in Europe, the world’s largest solar market. EU suppliers have blamed unfairly priced Chinese imports, fuelled by massive government subsidies, for the collapse of dozens of solar companies. 

But the EU’s move to limit the influx of cheap Chinese panels and protect local manufacturers has triggered outrage from trade groups, who argue the European solar industry and energy customers will also be damaged by the punitive tariffs placed on Chinese goods.

The duties will “result in a net reduction in solar jobs, restrict growth of the solar market and damage Europe’s chances of meeting its 2020 renewable targets,” said Paul Barwell, chief executive of the UK’s Solar Trade Association (STA), which issued a statement saying it was “very disappointed” with the EU’s decision.

Solar panels across the board will become more expensive as companies are no longer forced to compete on price with China, the STA said, punishing consumers and suppressing demand. The claims appear to be supported by a February study from economic consultancy Prognos, which concluded a duty of 5% would cause demand to drop by 10%.

The Chinese Ministry of Commerce has also responded angrily, saying it strongly opposes the duties and will seek to protect the interests of Chinese solar companies, who have a strong interest in the EU market. In 2011, the value of solar panel equipment exported by China to the EU was reportedly worth 21 billion Euros, or about 7% of China’s total exports to Europe. China has previously suggested it may retaliate with its own probe into European suppliers.

Jian Xie, chief operating officer of Chinese solar manufacturer JA Solar meanwhile told PV Magazine that uncertainty over the nature, scope and timing of potential European tariffs was proving an obstacle to business development.

The latest round of attacks on the EU policy follows a letter sent by nine solar trade bodies to the European Trade Commission in April, which said “irreparable harm” had already been caused by the EU investigation into Chinese-made solar panels.

Existing orders have been cancelled, while negotiations of contracts for the construction of new photovoltaic installations have been suspended or terminated, said signatories from countries including Italy, Sweden and the UK.

Tom Jamieson is an intern at chinadialogue