EU Makes No Promise to Solar Sector in China Price War

The Lede: At a debate in the European Parliament on Monday, the EU Commission struck a cautious tone and offered no concrete commitments in response to calls to support the bloc’s solar sector from the flood of lower-priced Chinese imports. This comes as the EU balances the health of its domestic solar production industry with the demands of its energy transition agenda which has led to a dependence on cheaper solar panels and other related green technology produced in China. 

What We Know:

  • European Commissioner for Financial Services Mairead McGuinness argued that trade measures should only be used in this regard ‘when that is in the overall union interest.’ While the EC did not offer any urgent support, McGuinness highlighted a number of actions that the body had already taken as well as possible future legislation including a forced-labor ban that could target solar panels made in the Xinjiang province as well as the EU’s Net-Zero Industry Act, which would require about one-third of solar panels used in the bloc to be made domestically. The legislation was provisionally agreed upon on Thursday by negotiators. 
  • Last Thursday, a group representing almost all of Europe’s photovoltaic (PV) manufacturing industry called for ‘emergency measures’ to protect the EU’s supply chain from ‘significant oversupply’ from China. Proposed measures included buying of European-made panels that have been left unsold in warehouses, additional EU project funding, and emergency curbs on access to the EU market for Chinese imports.

The Background: In September, EC President Ursula von der Leyen announced that the EU would launch a probe into Chinese state subsidies for electric vehicles (EVs), which the bloc argued unfairly undercut their car brands. Currently, Chinese companies control over 80 percent of the global supply chain for silicon solar panels. Meanwhile, the EU produced 3 percent of the solar panels it installed last year.

Likely Outcomes:

  • Although the EU has focused scrutiny on China for its subsidies for EVs, the signal here is that it will be unlikely that the bloc’s leadership wants to pursue that same approach to solar panels. With such an overwhelming market share of Chinese manufactured solar products and a relatively small domestic solar industry in comparative scale, the EU will likely continue to accept the cheaper Chinese products as a necessary part of its green agenda. EU-based producers will probably face the existential woes that have been predicted without the backing it was counting on.
  • As it has done when solar panel sales to the U.S. were curbed, China could again attempt to route its products through third countries to skirt Western restrictions. The EU would then have to follow the U.S. lead and close all possible doors to the flow of solar panels from China to those third countries as well. 


“The situation is really, really, really troublesome. We might lose a majority of the European industry in the next couple of months if there’s no strong political signal.” Johan Lindahl, secretary general of the European Solar Manufacturing Council (ESMC)

“The EU needs to have access to affordable solar panels to fuel the green transition and unlock the economic opportunities. Given that we currently rely to a very important degree on imports to reach EU solar-deployment targets, any potential measure needs to be weighed against the objectives we have set ourselves when it comes to the energy transition.” - Mairead McGuinness, European commissioner for financial services

“Our market is being attacked by cheaper imports from third countries fueled by huge subsidies. We have to think about providing immediate support to solar manufacturers.” - Liudas Mažylis, member of the European Parliament from Lithuania

“We need to ensure that we’re not dependent on China and we need to make a choice. Will the solar revolution be red or fully green? That is the choice we need to make,” - Ciaran Cuffe, member of the European Parliament from Ireland

Good Reads:

EU rebuffs European solar industry’s plea for emergency help to fight cheap China imports (SCMP)

With solar industry in crisis, Europe in a bind over Chinese imports (Reuters)

Dead in a few months: China wipes out EU’s solar industry (Politico)

EU mum as solar industry time bomb ticks (Politico)