A simmering trade dispute is highlighting a debate about the kinds of jobs America can sustain in a greening economy.
The Obama administration’s recent decision to slap import tariffs on Chinese solar cells was hailed by some domestic solar manufacturers as a victory for energy job creation, leveling the field while also sending a powerful message to Beijing about monopolistic behavior in crucial industries.
But a close look at the U.S. solar industry suggests that the tariffs may actually be a job killer because the vast majority of positions in the sector aren’t on the assembly line. Instead, upward of 70% of U.S. solar employment is in installation, sales and distribution — and companies that hire those workers argue solar cells must get significantly cheaper to remain competitive with other energy sources.
“What China is doing to boost its manufacturers is unfair, but tariffs could actually reduce solar jobs,” said Gordon Johnson, a green tech analyst at Axiom Capital Management. “The price of solar panels goes up and looks unaffordable compared to alternatives.”
Although the U.S. pioneered photovoltaic solar cells decades ago, it has fallen increasingly behind lower-cost manufacturers of the technology, including China, South Korea and Malaysia. But the U.S. is among the world’s fastest-growing solar consumers, opening vast opportunities for service-sector jobs in the sunlight-extraction business.
The matter comes to a head next month, when the Commerce Department will announce a determination on a possible second round of tariffs on Chinese-made silicon-based photovoltaic cells, which convert sunlight into electricity and are by far the most popular solar technology.
While tariff advocates say that protecting a solar manufacturing base is crucial to the nation’s energy security, others argue the U.S. has already lost that footrace. Instead of swooping in to rescue remaining plants, they say, the focus should be on reducing the cost of solar to speed liberation from fossil fuels, which dovetails with the goal of reducing unemployment.
“Installation is where all the jobs are,” said John Smirnow, vice president of trade and competitiveness at the Solar Energy Industry Assn. “There are 5,600 companies in the healthy, vibrant and growing solar-services sector.”
The Commerce Department’s May 17 ruling, in response to allegations of dumping by the U.S. unit of a German solar panel maker, could fundamentally alter the solar landscape in the U.S. Dumping is when a company or industry sells its products below cost to capture the market. If additional tariffs are applied, they will probably be much higher than the relatively light first round announced in March, which ran from 2.6% to 4.7%.
The smaller tariffs — designed to balance out Chinese subsidies of its solar factories — could squeeze margins for installers, but most experts agree they aren’t enough to radically reduce consumption. Anti-dumping duties, however, could run above 20%, dramatically increasing the cost of switching to solar.
Cost is a key factor in getting businesses and homeowners to convert to solar power. A typical residential roof setup costs about $25,000, which federal, state and local rebates and tax incentives can cut to about $13,000 in the city of Los Angeles. At that price, it still could take about a dozen years for the systems to pay back the upfront costs through lower electricity bills.