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The Green Jobs Chimera

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Walter Russell Mead, Via Meadia

Europe is mulling import tariffs on cheap Chinese solar panels to protect its own manufacturers; it could learn something from America’s attempt to do the same last year. Hint: it didn’t work.

China heavily subsidized its own solar industry, which led to a rapid expansion in the supply of solar panels. Demand didn’t keep up with supply, so the price of panels plummeted. Western producers couldn’t keep up with China in the race to the bottom, and companies like Solyndra closed up shop.

Last year, the US responded by enacting a set of import tariffs on Chinese panels, hoping to protect domestic producers. But slapping China with tariffs didn’t return the US solar industry to health. Instead, other cheap Asian manufacturers jumped in. The FT reports:

Rhone Resch, president of the Solar Energy Industries Association, said tariffs have had “a very small impact on the US market”: neither sending cell prices soaring, nor rebuilding the domestic manufacturing base. While imports from China have slowed significantly, those from other parts of Asia have soared. […]

The US imported almost as many Malaysian solar cells in the first three months of this year, as in the whole of 2011.

Europe is facing the same problem and considering the same solution. But America’s experience tells us that this is not easily fixed. The market is heavily distorted at this point; governments are propping up a nascent technology that can’t compete on price on its own. States can continue to subsidize producers and tax imports all they want, but that doesn’t fix the underlying problem: this technology isn’t ready for market.

The greens have deluded themselves into thinking that somehow market forces didn’t apply to manufacturing “clean” tech. It just illustrates the lack of policy competence in the green community, and the cleverness of crony capitalists, who know the silly greens will lobby for your sweetheart deal if you sprinkle some of their favorite phrases into the promotional literature.

Via Meadia, 3 June 2013