Europe Wanted Cheap Solar Panels. Now China Is About To Totally Take Over The Industry

Chinese manufacturers may soon cement their dominance over the European solar market if policymakers do not quickly step in to protect European firms, according to Politico.

Europe has set aside billions of euros to massively increase its reliance on solar panels to generate power, and the continent’s rush to go green has resulted in increased dependency on cheaper Chinese products that benefit from Chinese subsidies, according to Politico. That dependency has in turn severely undermined the few European businesses that specialize in producing solar products, and the European solar manufacturing base may effectively disappear within weeks if officials do not act decisively to support the industry.

“The situation is really, really, really troublesome,” Johan Lindahl, the secretary general of the European Solar Manufacturing Council (ESMC), told Politico. “We might lose a majority of the European industry in the next couple of months if there’s no strong political signal.”

China, which dominates the supply chains for raw materials and refining needed to mass-manufacture green energy products, currently controls about 80% of the world’s solar manufacturing capacity, according to Politico. State subsidies and low labor costs give Chinese solar products a clear cost advantage over European competitors, with some European solar products costing almost three times more.

Only 3% of the solar panels installed across Europe in 2023 were produced in Europe, according to Politico. Several firms, such as Exasun, a Dutch solar panel manufacturer, and Energetic, an Austrian company that made solar modules, have already gone out of business.

“Our market is being attacked by cheaper imports from third countries fueled by huge subsidies,” center-right Lithuanian lawmaker Liudas Mažylis told Politico. “We have to think about providing immediate support to solar manufacturers.”

The European Union (EU) wants to massively increase its domestic solar manufacturing and implementation by 2030, per S&P Global. Accordingly, EU officials may be hesitant to try to box China out of the solar market, fearing a setback to the climate agenda or any potential retaliatory protectionism from China, according to Politico.

The solar industry has been lobbying European officials to pursue measures like government buyouts of stocks, softening the rules around state aid for solar developments and implementing new rules for green projects that would decidedly favor European companies, according to Politico.

“[The] situation is worrying … there is an obvious trade imbalance and dependence on China here,” an anonymous official from an EU nation told Politico, which granted the individual anonymity to speak freely on the subject. However, “tariffs against China are probably a bad idea … We need to start making strategic choices. Maybe solar is not the battle we should fight.”

Nick Pope on February 6, 2024

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