The German green energy firm Q-cells, once the world’s largest producer of solar cells, will file for insolvency after being outcompeted by Asian competitors. Solar cell producers in China are capable of producing the same products as Q-cells at about one-third of the price, mainly because they receive government subsidies. In a previous PolicyMic article, I explain why this subsidization is not harmful to other countries from an economic viewpoint, but this article will focus on why environmentalists specifically should be pleased that China is subsidizing the solar industry.
Being a source of clean, renewable energy, solar power is naturally popular with many environmentalists. As technology advances, solar power is quickly becoming cheaper, and according to Solar Daily, the solar industry will soon reach the $1 per watt milestone.
A result of solar power becoming a cheaper energy alternative, is that its use around the world grows. For example, in 1980 solar power cost an average of $27 per watt, but over time, has fallen dramatically to nearly $1 per watt. Meanwhile, from 1995 to 2009, the solar industry experienced an impressive growth of 55.7%, and growth continues today. It is safe to assume that technology advancements that have made solar power more affordable bolstered the industry’s growth.
I will go further and say that continuing to reduce the cost of solar power will result in a continued growth in its usage, and it is this claim that leads me to the conclusion that environmentalists should be pleased by China’s actions. As stated before, China’s subsidization of its solar industry allows its solar panel manufacturers to produce panels at a fraction of the price of European and American competitors. As a result, people have been able to implement more solar energy around the world. China’s positive impact on the solar industry can be seen most easily by examining Suntech.
Founded by Shi Zhengrong and headquartered in Wuxi, China, Suntech is the world’s largest provider of solar panels and accounts for 8.1% of the entire global market. Its provision of affordable solar panels around the world is undoubtedly aided by the Chinese government’s subsidization of the industry and is yet another example of international savings provided by the Chinese taxpayer.
Environmentalists and prospective buyers of solar panels should thank China in its unending effort subsidize its manufactures which provides affordable, clean, and renewable energy around the world. As long as other governments refrain from implementing protectionist tariffs that prevent these savings from reaching consumers, China’s conscience decision to reduce the cost of solar panels will continue to enable growth of the solar industry.
Although promoting a clean environment may not be the reason for China’s decision to subsidize its solar industry, the action does so nonetheless.