Helping green industries and creating green jobs is not the same as helping the environment.
Helping green industries and creating green jobs is not the same as helping the environment. This is abundantly clear in the example of U.S. tariffs on Chinese solar imports. These came in response to U.S. industry complaints that Chinese solar companies were “dumping” solar onto the market, essentially selling it below cost. Now if what you care about is the environment and not green jobs, then China selling us cheap solar panels is great news. If you’re trying to create green jobs and green U.S. industry, then China subsidizing our solar panels is bad.
So what is this tariff accomplishing? The New York Times reports:
With the U.S. market expected to top 3 gigawatts of installations this year, Chinese solar panel makers have no plans to exit the U.S. market, and most have sought to buy key solar components outside of China to evade the U.S. tariffs.
Newly released import data showed U.S. solar imports from China fell 45 percent in May from a year ago, according to the Coalition for American Solar Manufacturing (CASM), whose trade complaint triggered the investigation into solar imports.
Canadian Solar, which makes most of its panels in China, has been buying solar cells from Taiwan for years as part of its supply chain strategy, said Chief Financial Officer Michael Potter. Now all U.S.-bound modules would be made with these slightly more expensive Taiwanese cells to avoid the tariff.
So while imports from China have decreased, imports from Malaysia, Taiwan, and the Philippines have increased sharply. But going around the tariffs is not cheap, and it will mean U.S. consumers are paying higher prices than they otherwise would.
This is what I wrote awhile ago about green jobs and I think this tariff debacle illustrates my point pretty well:
Once those jobs are created, the goal for policy-makers becomes preserving those jobs. This is the antithesis of creative destruction, and a huge impediment to progress. What happens if we build this giant “green economy” supporting millions of middle class jobs and then a cheaper and more environmentally friendly technology comes along that makes them all redundant? Will the politicians who decide our allocations of energy via mandate and subsidy allow those jobs to go away and progress to occur, or will they fight tooth and nail to preserve the inefficient status quo?
Environmental policy should focus on the environment, and focusing on green jobs does not do that. This leads to the exact sort of problems I predicted, where we miss out on superior technologies to protect incumbent U.S. firms and jobs:
Shawn Qu, Canadian Solar’s founder and chief executive, revealed that he is close to signing off on a new plant to build new high-efficiency solar cells that would have to be sold elsewhere under the current tariff regime.
“You are not going to see this solar cell in the United States in the near future,” Qu said at the Intersolar North American conference in San Francisco last week. “Too bad. This solar cell is produced in China.”
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