The New York Times has a front-page story today on China outrunning the U.S. in producing solar panels. The high profile is due to the Obama Administration trying to spin what is nothing more than a race to see which country will waste more money.
Solar power is a wonderful idea. It’s renewable, it’s clean, and parts of the U.S. are very rich in solar resources. Unfortunately, for right now it costs far too much money to generate — far more than nuclear, coal, oil, gas, or almost any other source.
It costs too much here, it costs too much in China, and it costs too much in Europe. The extra cost can only be made up by taxes or charging more for electricity (which is essentially a tax, one that hurts poorer people more). That’s why the Administration has stopped talking so much about how ‘green’ energy will help the economy.
Now the talk is of a green energy race, which we are in danger of losing to China unless we spend more taxpayer money. It certainly seems like a mistake to lose a race to the PRC, but not this one. This race is about who can most heavily subsidize an industry that can’t survive on its own. We are never going to win a subsidies battle with the PRC, and we should never want to.
Consider Germany. Because it’s not viable yet, solar generates less than 1% of the PRC’s own energy. China’s surge in manufacturing solar panels is actually due mostly to shipping them to Germany, after the German government subsidized the solar industry. In other words, German taxpayers paid the price for solar to be used and the companies that profited were Chinese.
Nearly all Chinese solar panel production is for export and nearly all the exports are made possible only because taxpayers in other countries pay for subsidies. When subsidies were cut, German taxpayers got richer and Chinese companies got poorer. Yet the Obama administration wants to repeat the German mistake and subsidize solar – in the name of beating the Chinese!
This is a race into a thicket of thorns. You win by realizing it’s a bad idea to join in.