The EU is planning to "attack" Chinese photovoltaic companies? Industry insiders warn that trade barriers will lead to a lose-lose situation

Source: Global Times

[Global Times special correspondent in Germany Aoki Global Times special correspondent Ren Zhong] "European photovoltaic has become an industry in crisis. Germany's "Bild" reported on the 28th that Europe's solar energy production is suffering "unsustainable losses", and it is difficult to confront Chinese products unless the German government supports it. Recently, a number of European PV companies have announced the suspension of production and the closure of factories. The Financial Times reported that the production crisis faced by Europe's solar manufacturing industry has made the EU once again consider "attacking" Chinese companies. However, a number of industry insiders have warned that any form of trade barriers will eventually lead to a "lose-lose situation".

On the 26th, the Spring Festival is approaching, and Chinese photovoltaic companies are rushing to order. (Visual China)

40% target vs. 2% reality

"The next solar company threatens to shut down. After Germany's largest PV company Meyer Burger threatened to close Europe's largest factory, another German PV manufacturer, Solarwatt, is also considering closing its plant in Dresden, Germany, after the newspaper Bild reported. Late last year, Solarwatt laid off about 10 percent of the plant's 850 employees for "the need to streamline its organizational structure."

Many European solar manufacturers are facing a production crisis. The Financial Times reported that Norwegian crystal companies, which produce the silicon ingots needed for solar cells, filed for bankruptcy in August last year. Norway's E24 website reported that in November last year, solar module company REC announced the closure of two polysilicon plants in Kristiansand and Bosglen, Norway. Bloomberg reported that Finnish solar manufacturer Valoe filed a debt restructuring application in December last year to avoid bankruptcy. That month, Austrian PV module manufacturer Energetica initiated bankruptcy proceedings. Attracted by a series of subsidies provided by the US Inflation Reduction Act, some European manufacturers such as Meyer Burger are looking to invest in the United States, according to the report.

Neuhaus, CEO of Solarwatt Germany, said that "the solar industry in Europe and Germany is currently being significantly weakened". According to Bloomberg, the European Union has said it aims to have at least 40% of its clean energy technology needs met by local production by 2030. However, according to the European Photovoltaic Industry Association, less than 2% of solar energy is currently produced in Europe.

"Submission to the United States and threats to China are both pathetic and futile"

The Financial Times reported on the 27th that a large number of Chinese photovoltaic products have entered Europe, threatening the production of local solar panels in Europe, and the European Union is considering emergency support measures for the European solar panel manufacturing industry. John Lindahl, secretary general of the European Solar Manufacturing Council, said: "There is serious global overcapacity and European manufacturers are incurring huge losses. We need to deal with the Chinese threat. EU officials told the Financial Times that the EU is considering an anti-dumping investigation into Chinese PV products, which could lead to punitive tariffs, or introduce measures to incentivize governments to keep factories running. However, no decision has been made yet.

The European Union took a look at China's solar industry 10 years ago. In 2013, the EU imposed anti-dumping and countervailing measures on Chinese solar panels, wafers and cells for the first time, and in 2017 they were extended for another 18 months before they expired in 2018.

The Le Monde Syndicate website reported that the European Union appears to be responding to its dissatisfaction with China's "dumping of photovoltaic products" with threats to put pressure on China. In the late 20th and early 21st centuries, China's state subsidies did help export Chinese products to Europe, but instead of complaining, Europe praised China's "active integration into Western trade." Now, when products such as Chinese solar panels and electric cars are competitive in the European market due to their high quality, blaming China is only "surprising".

According to the report, the EU's mishandling of the euro crisis, large-scale money printing, and the failure to establish a banking and capital market alliance mechanism have led to an unprecedented low level of European investment, which is the real reason why Europe lags behind China in the new energy sector, and the EU "yields to the United States and threatens China both pathetically and futilely."

There will be no winners

Germany's Süddeutsche Zeitung reported that some German solar module manufacturers have asked the German government to reward individuals who use European products, as well as large-scale projects that use "Made in Europe". However, this request has been opposed by many peers. Philip Schröder, founder of the German new energy start-up 1Komma5°, said that the subsidy will not have any effect, because European manufacturers do not have a clear technological advantage, and in the absence of China, European manufacturers cannot produce supplies.

Hong Kong's "Asia Times Online" analysis said that it is difficult for the EU to get rid of its dependence on Chinese-made photovoltaic modules and other solar products. While Europe has a well-established solar supply chain, it lacks economies of scale.

According to McKinsey & Company, a US consulting firm, European companies account for only 11% of the global solar polysilicon market, 1% of the ingot and wafer market, 1% of the solar cell market, and 3% of the photovoltaic module market. By 2025, these shares are expected to increase to 12%, 4%, 4% and 5%, respectively. China is the largest producer and consumer of solar energy, producing about 75% of the world's solar cells and 70% of solar modules, and the largest market for these modules is Europe.

According to an analysis by Asia Times Online, China's huge production capacity, coupled with a complete supply chain consisting of materials, equipment, production and assembly, gives it an unparalleled economy of scale and cost advantage, which China is unlikely to lose even if Europe achieves its goal of energy independence. According to Europe's own statistics, a large part of the installed solar power capacity planned to be installed in the coming years is still dependent on China.

According to the EU news website "Eurodynamics", in the Net Zero Industry Act, Europe has imposed restrictions on "net-zero" technology made in China, which will make it difficult for Europe to reach a "green deal" and seriously damage the credibility of the region in climate protection. In addition, according to the German Renewable Energy Association, more than 90% of jobs in the solar industry are related to planning and installation, and targeting China could threaten the workers who do these jobs.