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February 13 2014

America’s Solar Hypocrisy

National Review Online
Jillian Kay Melchior

Earlier this week, the Obama administration filed a case with the World Trade Organization, complaining that India’s solar policies discriminate against American companies. Merits of the case aside, this argument is hypocritical in principle — because America heavily favors its own domestic solar companies.  

It’s indisputably true that India supports its own domestic producers. Its Jawaharlal Nehru National Solar Mission seeks to significantly boost energy generation from renewable sources, and its rules express a clear preference for domestic solar manufacturers over foreign ones.

What’s annoying about this trade case is that the United States has plenty of its own efforts to support its own solar manufacturers. Just months ago, the White House and Department of Defense chose to discriminate against foreign companies when buying solar panels for American military bases. And the stimulus, with its explicit “Buy American” provisions, ensured that federal procurement of solar products was a bonanza for domestic manufacturers.

The fundamental problem is that solar is simply too expensive to be competitive, especially when compared to other energy sources. In the Energy Information Administration’s 2018 cost projection for various energy sources, solar costs twice what natural gas does, and it’s also 67 percent more expensive than wind energy. But those cold, hard economic truths are often ignored by politicians who want to cater to an environmentally concerned constituency or, more sinisterly, hand out taxpayer dollars to their pals who own green corporations.

In both the United States and India, the solar marketplace is largely artificial, propped up by subsidies and tax incentives. The U.S. Department of Energy has given $13.27 billion in taxpayer-backed loans to solar companies, including Solyndra, and the U.S. Treasury has doled out $2.1 billion in tax grants to solar companies. In 2010 alone, the latest year on record, the federal government spent $1.134 billion directly subsidizing solar. When that much taxpayer money is splurged, it’s tough not to justify preferences for domestic producers — a fact as true in India as it is here.

The irony is that buy-domestic rules for environmental initiatives actually hinder countries’ abilities to meet their renewable-energy goals. Solar energy is more affordable in the United States when we have access to (artificially) cheap Chinese panels; likewise, India can buy more solar when it benefits from the goods made less expensive thanks to the largess of American taxpayers.

— Jillian Kay Melchior writes for National Review as a Thomas L. Rhodes Fellow for the Franklin Center. She is also a senior fellow for the Independent Women’s Forum.

Independent Women’s Forum’s mission is to improve the lives of Americans by increasing the number of women who value free markets and personal liberty. Sister organization of Independent Women’s Voice.
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