With solar industry in crisis, Europe in a bind over Chinese imports

Feb 6, Kathmandu – Europe faces a complex challenge in its green energy transition as an influx of affordable Chinese solar panel imports propels a surge in solar installations to record levels. However, these imports are simultaneously wreaking havoc on Europe’s few local solar manufacturers.

Governments and industry stakeholders find themselves in a quandary, torn between supporting the green energy boom and safeguarding the struggling domestic solar manufacturing sector. Recent data from the International Energy Agency reveals that a significant portion, in some cases up to 95%, of solar panels and parts used in the European Union’s recent solar capacity expansion came from China.

Despite the overall success in green energy adoption, local European solar panel manufacturers are at a breaking point due to the inundation of cheaper imports and oversupply. Production closures are looming, and the sector warns that half of its capacity could shut down in the coming weeks without timely government intervention.

Policymakers are grappling with divergent views on how to address the issue. German Economy Minister Robert Habeck voiced his concerns to the European Commission in November, cautioning against potential trade restrictions on Chinese solar imports. He argued that such restrictions could hinder Europe’s swift green energy expansion and lead to a 90% increase in costs within the photovoltaic (PV) market. Habeck further warned of potential bankruptcies among EU companies involved in assembling and installing solar panels using imported parts.

Germany’s own plans to support the solar sector have been disrupted by a government budget crisis, adding another layer of complexity to the situation. Meanwhile, Spain is considering tariffs on solar panel materials, the Netherlands proposes covering solar PV imports with the EU’s carbon border tax, and Italy recently unveiled a 90 million euro ($97 million) investment in a PV panel factory in Sicily.

The intricate balancing act between fostering green energy growth and protecting domestic industries has policymakers and industry stakeholders navigating a challenging path forward.

– source : reuters