EU says China guilty of giving illegal aid to solar industry

An employee dries newly made solar panels at a factory of a photovoltaic company in Jiaxing, Zhejiang province June 5, 2013.

Credit: Reuters/William Hong

By Robin Emmott

BRUSSELS | Tue Aug 27, 2013 5:30pm BST

BRUSSELS (Reuters) - The European Union has warned Beijing it has evidence Chinese solar companies benefit from illegal subsidies, people close to the issue said on Tuesday, but Brussels says it will not take action for now following a deal to defuse the row.

European companies accuse Chinese rivals of benefiting from unfair state aid allowing them to dump about 21 billion euros (18 billion pounds) worth of solar panels at below cost in Europe last year, putting European firms out of business.

The solar dispute, by far the biggest between China and the EU, threatened a wider trade war in goods from wine to steel until Brussels and Beijing agreed a minimum price for panels from China in late July and eased tensions.

But a nine-month investigation by the European Commission into China's solar industry has found Beijing broke World Trade Organisation rules by handing out cheap loans, land, interest-free credit lines and tax breaks to companies, people with knowledge of the situation told Reuters.

"There are clear indications that (Chinese) government policy influences the decision-making of the banks when deciding on the terms of financing to solar companies," said one person who declined to be named because the findings are not public.

A second person said Beijing, as well as Chinese and EU manufacturers, had been given the results of the investigation.

Under EU law, the Commission cannot impose more sanctions on Chinese solar exporters following the deal to set a price floor, but its investigation could influence EU free-trade advocates such as Germany and Britain that oppose limits on Chinese goods.

Wary of offending China's leaders and losing business in the world's second largest economy, Berlin and London have argued that concerns about Chinese solar dumping are secondary to the much larger EU-China trade relationship.

Europe is China's most important trading partner, while for the EU, China is second only to the United States.

Chinese solar panel production quadrupled between 2009 and 2011 to more than the world's entire demand as it took advantage of a growing market for green energy to tackle climate change.

Chinese companies deny receiving illegal subsidies, saying economies of scale allow them to sell at lower prices than their European rivals.

Beijing has also accused Europe of subsidising its solar industry. The European Union says aid to final users of solar energy is lawful to stimulate green energy, arguing China is wrong to directly help companies to produce solar products.

EU governments must decide in December whether to back the July price deal brokered by EU Trade Commissioner Karel De Gucht so it can run until 2015. It was seen as a compromise in dealing with China because a majority of EU governments were against prohibitive duties on Chinese solar panels.

The Commission's investigation could also have implications for Chinese telecoms companies that De Gucht, who has said China subsidises "nearly everything", has publicly accused of dumping products in Europe.

De Gucht, who handles trade issues for the European Union's 28 members, has threatened to launch an investigation that could lead to hefty duties on Chinese telecoms companies' equipment.

(Editing by Jeff Coelho)

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Countryside Fears Over Solar Energy Growth

By Emma Birchley, East of England Correspondent

Rural campaigners say the push to generate green energy through giant solar farms is having an unacceptable impact on Britain's rural landscape.

Developments like Burntstalks Solar Farm in Norfolk, which has nearly 50,000 photovoltaic panels and captures enough of the sun's rays to power nearly 4,000 homes, are heralded as a sensible solution to the UK's energy needs.

However, some claim the sites are yet another blot on the landscape and are ruining the countryside.

David Hook, from the Campaign to Protect Rural England, told Sky News: "I think that if policy is not changed ... the industrialisation through solar farms and extra wind turbines is going to have a dramatic effect on the countryside, and a very negative effect."

It is only two years since the UK's first large scale sun park began generating electricity in Lincolnshire.

There are now nearly 160, mostly in rural areas, with a further 229 under construction or awaiting approval.

David Hook wants policy to change

Lightsource Renewable Energy owns and operates dozens of solar farms, including Burntstalks, near King's Lynn.

Mark Turner, the company's operations director, said: "The balance we have to strike is between a solar farm that can generally only be seen by people very close up to it and usually by fleeting glimpses through hedgerows as you are driving along, versus potential wind farms or the other alternatives of non-renewables including nuclear power stations and coal-fired power stations.

"The amount of ground taken up by the farm is minimal and what we then try to do, as far as possible, is to use the land for dual use.

"We graze sheep or plant wild flowers, so the land is used for the kind of purpose it would be used for before the panels were here."

The Government has made it clear it backs the production of solar energy, which it hopes will eventually produce 20GW of energy every year - eight times more than at present and enough to power around six million homes.

Its priority is for panels to be put on brownfield sites and the roofs of factories, hospitals and houses but according to Mr Turner, that is not always possible.

"Finding roof tops that are owned by companies we can rely on to be there in the 25 years we need to return the investment is extremely difficult," he said.

"And finding brownfield sites that are sufficiently far enough south to generate enough electricity, are close enough to the grid and aren't dedicated to other purposes, is extremely difficult."

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Countryside Fears Over Solar Energy Growth

By Emma Birchley, East of England Correspondent

Rural campaigners say the push to generate green energy through giant solar farms is having an unacceptable impact on Britain's rural landscape.

Developments like Burntstalks Solar Farm in Norfolk, which has nearly 50,000 photovoltaic panels and captures enough of the sun's rays to power nearly 4,000 homes, are heralded as a sensible solution to the UK's energy needs.

However, some claim the sites are yet another blot on the landscape and are ruining the countryside.

David Hook, from the Campaign to Protect Rural England, told Sky News: "I think that if policy is not changed ... the industrialisation through solar farms and extra wind turbines is going to have a dramatic effect on the countryside, and a very negative effect."

It is only two years since the UK's first large scale sun park began generating electricity in Lincolnshire.

There are now nearly 160, mostly in rural areas, with a further 229 under construction or awaiting approval.

David Hook wants policy to change

Lightsource Renewable Energy owns and operates dozens of solar farms, including Burntstalks, near King's Lynn.

Mark Turner, the company's operations director, said: "The balance we have to strike is between a solar farm that can generally only be seen by people very close up to it and usually by fleeting glimpses through hedgerows as you are driving along, versus potential wind farms or the other alternatives of non-renewables including nuclear power stations and coal-fired power stations.

"The amount of ground taken up by the farm is minimal and what we then try to do, as far as possible, is to use the land for dual use.

"We graze sheep or plant wild flowers, so the land is used for the kind of purpose it would be used for before the panels were here."

The Government has made it clear it backs the production of solar energy, which it hopes will eventually produce 20GW of energy every year - eight times more than at present and enough to power around six million homes.

Its priority is for panels to be put on brownfield sites and the roofs of factories, hospitals and houses but according to Mr Turner, that is not always possible.

"Finding roof tops that are owned by companies we can rely on to be there in the 25 years we need to return the investment is extremely difficult," he said.

"And finding brownfield sites that are sufficiently far enough south to generate enough electricity, are close enough to the grid and aren't dedicated to other purposes, is extremely difficult."

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EU, China resolve solar dispute - their biggest trade row by far

By Robin Emmott and Ben Blanchard

BRUSSELS/BEIJING (Reuters) - China and the European Union defused their biggest trade dispute by far on Saturday with a deal to regulate Chinese solar panel imports and avoid a wider war in goods from wine to steel.

After six weeks of talks, the EU's trade chief and his Chinese counterpart sealed the deal over the telephone, setting a minimum price for panels from China near spot market prices.

European solar panel makers accuse China of benefitting from huge state subsidies, allowing them to dump about 21 billion euros ($28 billion) worth of below-cost solar panels in Europe last year, putting European firms out of business.

Other European industries that have accused China of dumping have faced imports of about 1 billion euros a year.

Europe planned to impose hefty tariffs from August 6 but, wary of offending China's leaders and losing business in the world's No. 2 economy, a majority of EU governments - led by Germany - opposed the plan, which led to the compromise deal.

"We found an amicable solution," EU Trade Commissioner Karel De Gucht said. "I am satisfied with the offer of a price undertaking submitted by China's solar panel exporters," he said, referring to the minimum price for China's imports.

Chinese Commerce Ministry Spokesman Shen Danyang welcomed the deal, hailing a "positive and highly constructive outcome".

An EU diplomatic source said that in the solar agreement, the agreed price was 0.56 euro cents per watt, near the spot price for Chinese solar panels in July in Europe, according to solar exchange pvXchange.

Under the terms of the deal, China will also be allowed to meet about half Europe's solar panel demand, if taken at last year's levels. EU consumption was about 15 gigawatts in 2012, and China will be able to provide 7 gigawatts without being subject to tariffs under the deal, the EU source said.

COURT CHALLENGE

That did not satisfy some EU solar manufacturers who said the minimum import price agreed still constitutes dumping and accused the European Commission of breaking EU law by failing to protect European industry.

European solar panel manufacturer association EU ProSun said it will go to the European Court of Justice in Luxembourg to challenge the deal.

"Even the biggest EU trade conflict ever must still be resolved on the basis of the applicable law," said EU ProSun's president, Milan Nitzschke.

However, China has sold solar panels for as little as 0.38 cents a watt, according to the European Commission, which handles trade issues for EU states, and tariffs would also hurt EU panel installers, who benefit from cheaper Chinese panels.

Chinese manufacturers such as U.S.-listed Trina Solar , Yingli Green Energy and Suntech Power Holdings are among those exporting to Europe.

Chinese solar panel production quadrupled between 2009 and 2011 to more than the world's entire demand as it took advantage of a growing market for renewable energy in the face of concerns about climate change.

But the global financial crisis and ensuing euro zone crisis have forced European governments to withdraw generous subsidies for solar energy. That, along with Chinese imports pushing down prices, have sent many European solar companies into bankruptcy.

German group Conergy filed for insolvency this month.

Still, those concerns have become secondary to the much larger EU-China trade relationship at stake over the panels dispute.

Europe is China's most important trading partner, while for the EU, China is second only to the United States. Chinese exports of goods to the bloc totaled 290 billion euros last year, with 144 billion going the other way.

Responding to the EU's move to impose duties, China launched an anti-dumping inquiry into European wine sales, which may have led to exporters in France, as well as Spain and Italy, being hit with retaliatory duties.

EU and Chinese diplomats now expect that case to be dropped as a goodwill gesture, although officials declined to comment on Saturday.

(Additional reporting by Martin Santa in Brussels; Editing by Louise Ireland)

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China, EU reach settlement on solar panels

BEIJING (AP) — The Europe Union and Chinese solar panel exporters said Saturday that they had reached a settlement in their long trade dispute, with the exporters agreeing to sell their products at a minimum price in the EU market.

The agreement ends one of the biggest-ever trade disputes between China and Europe — a row that threatened to escalate into a full-blown trade war involving European wines and to disrupt EU-China relations.

The settlement comes after negotiations that began in June when the EU announced that duties averaging 47 percent on Chinese-made solar panels, cells and wafers would come into effect in August. The EU said then that China was selling its products in the EU market at below-cost prices and harming the European solar panel industry.

In announcing the settlement, EU Trade Commissioner Karel De Gucht said that he was satisfied with the offer by the Chinese solar panel exporters and that the agreement would stabilize the European solar panel market.

"We have found an amicable solution that will result in a new equilibrium on the European solar panel market at a sustainable price level," he said.

The China Chamber of Commerce for Import and Export of Machinery and Electronic Products said in a statement that the price promise represents the majority will of Chinese companies and that it would allow Chinese manufacturers to continue to export their products to Europe and retain fair market shares. The chamber described the negotiations as "arduous" and "meticulous."

"China's solar panels industry is always committed to maintaining a fair international trade environment," the statement said. "It opposes trade protectionism and supports resolving disputes through negotiations."

Chinese Ministry of Commerce spokesman Shen Danyang said China welcomed the settlement. The EU is the largest export market for Chinese solar panel products, according to Shen.

In Europe and the United States, the price drop in the solar panels market in recent years has wreaked havoc among EU and U.S. manufacturers, forcing several out of business.

More than a fifth of all jobs — or about 24,000 — in Germany's once-burgeoning solar panel industry have been lost since 2011. A recent government report found that solar industry revenue dropped to 7.34 billion euros ($9.53 billion) last year from 11.9 billion euros in 2011 and blamed the price fall on cheap solar panels made in China.

But German Chancellor Angela Merkel, the most powerful EU leader, spoke out strongly against the duties, fearful they would result in a Chinese backlash.

In early July, China's commerce ministry opened an anti-dumping probe into wine exports from Europe in response to the EU's planned tariffs on Chinese solar panels.

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Associated Press writer Frank Jordans in Berlin contributed to this report.

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