European Union countries have long set world-leading goals for fighting climate change and boosting renewable technology. But the economic bottom line might have been a bigger concern when they were faced with a trade war with China over green technology.
A new E.U.-China deal to set a price floor on cheap Chinese solar panels has opened rifts among European policymakers, manufacturers and environmental advocates, with green energy taking a back seat to broader efforts to defend a fast-growing European export market in China.
The deal, intended to provide partial shelter to European solar-panel manufacturers, averts a broader trade war, as Europe struggles with record-high unemployment and gloomy prospects. China had threatened to boost tariffs on European wine if planned tariffs on Chinese-made solar panels of up to 67.9 percent had gone into effect. Instead, the floor will keep prices from falling further from their already-low levels, a step that European solar manufacturers say will do little to protect them.
The divisions have been especially wide in Germany, which has some of the most ambitious green goals in Europe and is the hub of the continent’s once-booming solar-panel industry. Now, Chinese-made solar panels compose 80 percent of the European market.
Many backers of E.U. green initiatives who support the deal say that they do so with mixed feelings.
“We were quite a bit divided. We had quite a few talks,” said Sven Teske, Greenpeace International’s renewable-energy director, who lives in Germany.
“We came to the conclusion that the rapid expansion of solar manufacturing in China was actually, at the end of the day, quite good,” he said. “The negative side is that in Germany, solar was a very good way of showing to the general public, ‘See, you can also get a job with renewable energy, and it’s a good alternative to the coal-based jobs,’ ” which are a major part of the economy in areas of eastern Germany, where many solar-panel manufacturers had set up shop.
Higher prices for Chinese solar panels would have preserved manufacturing jobs in Europe but would slow the solar boom that has covered European roofs, fields and open spaces with photovoltaic panels. Labor costs are far cheaper in China, and E.U. manufacturers say Chinese factories benefit from cut-rate, government-backed prices for aluminum and other raw materials.
Germany subsidizes solar-panel installation, regardless of who manufactured the panels, through guaranteed rates paid for electricity fed back into the grid. The country leads the world in installed solar capacity, although its area is just 3.5 percent of the United States’. Last year, Germany generated 4.7 percent of its electricity from photovoltaic sources.
Some European environmentalists say that going green might create fewer jobs than they had once hoped. That gloomier assessment is echoed in the United States, where the Obama administration’s first-term emphasis on the possibilities of green jobs has largely given way to a second-term focus on nurturing a manufacturing boom through cheaper fossil fuel energy.
Cheap solar panels from China have also helped nurture jobs in installation in the United States and Europe, because more panels are bought as a result of lower prices, analysts say.
On Chinese solar-panel dumping, though, U.S. trade negotiators last year took a different path than Europe, imposing a 31 percent tariff on imports that was an attempt to mirror the extent to which panels were being sold below cost. China, in response, imposed tariffs as high as 57 percent on U.S.-made polysilicon, a raw material for photovoltaic cells — a tit-for-tat move in a trade war that European negotiators had hoped to avoid.
In an unusual move motivated by fears of hurting Germany’s robust exports to China, Chancellor Angela Merkel had tried to discourage the anti-dumping tariffs.
Critics say the China compromise will do little to discourage dumping.
“In the long run, the prices have to go up, because even countries that dump a product can’t subsidize them forever,” said Frank Asbeck, chief executive of SolarWorld, a German solar-panel manufacturer that led efforts to fight China on dumping.
“If all the other conditions were the same, if the quality were the same, of course we would appreciate if someone could produce the solar panels 25 or 30 percent more cheaply than us. But they can’t do it — not even the Chinese,” he said. “They are not producing it with magic wands. They are doing it with manpower.”
But many European environmentalists say it is more important for solar panels to be cheap than for them to be manufactured in Europe.
“We have to change our energy supply. We have to go to renewable energy. And for that, renewable energy has to be very cheap. The low prices from China are good,” said Volker Quaschning, a professor of renewable energy systems at Berlin’s University of Applied Sciences. “Photovoltaic power must compete in the long term against conventional power plants, against coal power.”
The shift, one analyst said, may yet create European jobs, even if they are not the sort of large-scale, assembly-line production that has largely shifted to China.
“There is hope for European manufacturers who make more innovative technology,” said Claudia Kemfert, an expert on the economics of energy at the German Institute for Economic Research. Germany’s goals of generating 80 percent of its energy from renewable sources by 2050 will require large-scale electricity storage and a power-grid upgrade, she said — all of which can create opportunities for domestic industries.
“These are more sophisticated products,” she said. “Those companies who can do that will benefit.”
Petra Krischok contributed to this report.