On Wednesday, the Commerce Department levied tariffs from 18 percent to 240 percent on solar panels imported from China. At best, this silly policy will increase the price of electricity in America; at worst, it could be the first salvo in a harmful trade war.
Renewable energy sources like solar and wind power are expensive and unreliable, so they cannot compete with conventional energy sources in the electricity market. Instead, demand for green energy is established by Soviet-style production quotas, known as renewable energy standards. More than 30 states have enacted such standards, which force consumers to use increasing amounts of green energy.
The cheapest way to achieve these solar energy consumption mandates is to import Chinese solar panels, due to the simple fact that solar panels manufactured in China are cheaper than solar panels manufactured in America. By adding an import tax on Chinese solar panels, the Obama administration is making electricity more expensive for citizens subject to renewable energy quotas.
And that’s the best case! Invariably, trade tariffs are tit-for-tat measures. China is likely to respond in kind. This is the slippery slope to trade wars, the impact of which would be devastating to the fragile global economy.
Proponents of the import duties claim that they are necessary so that the U.S. can win a race with China to capture global market share for green energy manufacturing. This reasoning is ridiculous. As I explained above, the market for green energy is wholly a function of government favors. Unfortunately for the green energy industry, political winds are quick to change. As costs mount, politicians will rescind the government’s support, and markets will crash. It’s already happened elsewhere. Now, it’s happening here: The American wind industry claims that it will shed half its workforce if the Congress allows a single tax credit to expire.
Plainly, so-called “sustainable” energy is reliant on unsustainable government support. It should go without saying that this is a poor business model. When the renewable energy bubble bursts, the global industry leader will be the biggest loser. With that in mind, the supposed race with China for green technological supremacy is one the U.S. would be wise to forfeit.
[N.B. I made these points in an interview with Press TV, available below.]