Global conflict on control of PV supply chain

The global conflict surrounding the control of the global photovoltaic (PV) supply chain has been an ongoing issue between the United States and China for several years. A report from the Massachusetts Institute of Technology (MIT) sheds light on the differing views of the issues and actions taken by both nations.

The US has accused China of “dumping” PV products into the US market, selling at prices below cost. This resulted in a group of US PV manufacturers filing a complaint with the US Department of Commerce (DOC) and International Trade Commission (ITC), alleging that Chinese PV manufacturers were selling product into the United States below cost and harming US manufacturers. This led to substantial anti-dumping duties being imposed on a number of Chinese crystalline silicon cell and module manufacturers in a preliminary decision in May 2012. The European Community also initiated an anti-dumping inquiry against Chinese PV manufacturers in September 2012.

In response, the Chinese PV industry strenuously objected to the US Government’s action, urging the Chinese government to dispute strongly the US tariffs. The Chinese argue that their industry is more efficient than the US industry at the PV cell and module manufacturing levels, which explains the difference in cost and selling price between firms in the two countries. Chinese companies have also moved actively to change the location of their manufacturing activities, mostly elsewhere in Asia, to circumvent tariffs on imports to the United States.

The Chinese government has also indicated its support for the domestic PV sector, bringing counter allegations of unfair US trade practices in PV to the World Trade Organization. Furthermore, the debate over trade practices and the difficult financial circumstances of the Chinese PV industry prompted the central government to review its strategy for supporting solar energy in general and providing assistance to the distressed PV industry in particular.

However, this is not a simple trade dispute. Both the United States and China see PV as a key future technology that will be widely adopted in their countries and elsewhere in the world. Establishing a dominant national position in the technology has advantages for both domestic deployment and international competitiveness. Moreover, PV carries the aura of being a renewable technology that provides jobs without endangering the environment or emitting CO2, thus attracting broad public support. Both governments have been eager to encourage all aspects of PV industrial development, including R&D on new technologies, demonstration of new technologies, and a wide array of policy measures to encourage deployment of PV domestically over less desirable conventional electricity generating technologies. Many of these policy measures have the indirect effect of advantaging domestic PV firms in international markets.

The global conflict over the control of the PV supply chain is a complex issue with deep roots in the competitive interests of both the United States and China. While both governments have taken actions to protect their domestic industries, there are broader implications for the global adoption of PV technology and the future of renewable energy. As the world faces the challenges of climate change and seeks to transition to a more sustainable energy system, finding ways to cooperate and collaborate on the development and deployment of PV technology will be crucial for all nations involved.