The clean energy transition is changing how we view strategic resources. In a hydrocarbon-centric world, a small group of countries that export petroleum and created a cartel to exploit their position has an outsize influence on geopolitics. In a clean energy world, the emphasis and influence shift from natural resources to technology. Any country that establishes a monopoly over manufacturing clean energy technology will gain a global advantage not dissimilar to OPEC.
And if we’ve learned anything, it’s that an energy cartel’s interests rarely align with ours, even when it includes allies.
Logically, a clean energy transition should put everyone on equal footing since all nations have access to sunlight — a free fuel. However, a semiconductor must convert those photons from the sun into electrons for the grid, and that semiconductor – solar panels – has rapidly emerged as a strategic technology. Alarmingly, China is close to monopolizing its production, controlling supply, pricing and access.
In “The Wealth of Nations,” Adam Smith wrote that if “any particular manufacture was necessary, indeed, for the defence of the society, it might not always be prudent to depend upon our neighbours for the supply.” Written in 1776, these words are deeply relevant today — and not simply because Smith examines the use of subsidies to promote exports and undercut and undermine foreign competition.
For the first time, we have a president who stood and won on a campaign platform identifying climate change as the biggest challenge of our times and a promise to transform our nation into the world’s “clean energy superpower.”
With the fight against climate change gathering momentum, solar panels are the next crude oil. However, unlike oil reserves, we can manufacture solar panels, creating a once-in-a-lifetime opportunity to place our energy independence in American hands. As President Joe Biden works towards the energy transition, his administration must recognize solar panels for what they are: a strategic semiconductor technology generating an energy resource vital to the fight against climate change.
China has long recognized their potential, subsidizing the manufacture of photovoltaics, allowing its solar companies to overproduce solar panels, artificially depress prices, create a virtual global monopoly and, by design, enable a crucial geopolitical lever.
Companies like mine, the only American presence among the world’s largest solar manufacturers, face down the threat from China’s state-subsidized solar industry each day. The implications of surrendering our energy security to an adversarial nation are plain.
China is all too willing to link trade and politics, using imports and access to its economy as a stick when faced with criticism or when its entities are denied the market access it wants but doesn’t itself provide. But toys and tomatoes are not strategic resources, and reduced supplies would be an inconvenience, not a national security issue.
While China doesn’t yet have an absolute monopoly on solar panel manufacturing, it is close enough to cause concern. The world’s largest solar panel manufacturers are expected to exit 2021 with approximately 250 gigawatts of manufacturing capacity. Ninety-two percent of this is tied to China.
According to a recent report by the Center for Strategic and International Studies and Bloomberg New Energy Finance, Chinese companies control two-thirds of the world’s polysilicon manufacturing capacity, 90 percent of crystalline silicon wafer manufacturing and 72 percent of solar panel manufacturing capacity.
Its companies are rapidly becoming a cartel, controlling enough capacity to slow the Biden administration’s plans for a clean energy transition, if China chooses to. This makes solar technology, its production, and supply a matter of national security.
Yet, lobbyists continue to advocate against the safeguards that prevent China from decimating what’s left of onshore solar manufacturing. They want Americans to believe that there are few options but to rely on Chinese solar companies in our fight against climate change, arguing that domestically produced solar technology and import tariffs make solar electricity more expensive.
Nothing could be further from the truth. It is now cheaper to build solar power plants, with fixed electricity costs over the 35-40-year life of a plant, than to add any other type of generation in many parts of the United States.
Chinese solar panels are cheap because their manufacturers benefit from state subsidies and subsidized coal electricity in possible violation of World Trade Organization rules and, appallingly, may use forced labor. The Biden administration needs to counter this with a level playing field that allows domestic solar manufacturers to compete on their own merits.
And we can do more than compete. We can enable energy security and the fight against climate change, ensuring that in building back better, we are building back responsibly.
Mark Widmar is the CEO of First Solar, the only American company among the world’s largest solar manufacturers.
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