Europe and China Agree to Settle Solar Panel Fight

The settlement essentially involves setting a fairly high minimum price for sales of Chinese-made solar panels in the European Union to try to prevent them from undercutting European producers. Those producers accused Chinese manufacturers of benefiting from enormous loans from state-owned banks and other government assistance that enabled them to charge prices that would otherwise be uneconomical.

“We have found an amicable solution that will result in a new equilibrium on the European solar panel market at a sustainable price level,” Karel De Gucht, the European trade commissioner, said in a statement.

The deal immediately met with ferocious criticism from the European manufacturers that had filed the complaint, and it complicates a similar dispute between the United States and China.

Mr. De Gucht’s decision in June to carry out his threat to impose tariffs on solar panels from China generated significant fears within the union about retribution from China. Chancellor Angela Merkel of Germany called for further negotiations to avoid harm to German exporters. European importers of solar products from China also opposed the tariffs.

At the time, Mr. De Gucht said he had been left with no choice but to impose the tariffs since his investigators found a systematic effort by Chinese companies to sell solar panels in Europe below the cost of making them, a practice known as dumping.

On Saturday, officials at the European Commission said they could not give details of the deal, including the price that Chinese exporters would pay to sell their panels in Europe, until the arrangement had been formally approved by the commission. But a European Union official, who spoke on condition of anonymity because the deal had not yet been formally approved, said the two sides had agreed to a minimum price of 0.56 euros per watt (74 cents), which would base any potential surcharge on the amount of electricity generated by each imported panel.

The European solar manufacturers who lobbied for tougher action against the Chinese exporters on Saturday promised to sue over the settlement.

The agreement “is contrary in every respect to European law,” said Milan Nitzschke, the president of EU ProSun, an industry group. A minimum price of 0.55 to 0.57 euros was at the level of “the current dumping price for Chinese modules,” the group said in a statement.

The arrangement would cover exports from 90 of about 140 Chinese exporters that were examined during the investigation, and that represent 60 percent of the panels sold in Europe, the government official said. Those 90 companies would no longer face tariffs that were put in place in June. Chinese exporters that did not agree to the terms will still face tariffs that are set to rise to 47.6 percent on Aug. 6 from the current level of 11.8 percent, the official said.

The Chinese government hoped from the start of the trade case with the European Union for a negotiated settlement instead of a legal battle. This deal comes as a relief, said He Weiwen, the co-director of the China-United States-European Union Study Center at the China Association of International Trade in Beijing.

The European settlement with Beijing in some ways complicates a similar dispute between the United States and China. The United States Commerce Department imposed final anti-dumping and anti-subsidy tariffs last spring on imports of solar panels from China. China responded on July 18 that it was preparing to impose tariffs of more than 50 percent on polysilicon, the main material for solar panels, on imports from the United States and South Korea.

The United States began trying in early summer to arrange a comprehensive deal among Beijing, Brussels and Washington that would set new global trade arrangements for solar panels in exchange for the removal of the American tariffs and the preliminary European tariffs. But faced with a complex process in the United States for removing tariffs once the Commerce Department has made them final, the European Union pushed ahead with its own negotiations with China, a Senate aide with detailed knowledge of the issue said on Friday.

“The administration has been doing the right thing on this, pushing for talks and trying to get a joint settlement with Europe, but the Europeans have not had the same attitude and instead are pursuing talks with China independently of the U.S., which has stalled progress on U.S.-China talks,” said the aide, who spoke anonymously because of the diplomatic sensitivity of the issue.

The Office of the United States Trade Representative, which is part of the White House, had no immediate response to the European deal, which was announced shortly before dawn in Washington.

Solar panels represent more than 6 percent of China’s exports to the Continent, making them one of the largest Chinese exports to the European Union. In 2011, Chinese exports of panels and their main components to the European Union were worth about 21 billion euros or $27.4 billion.

China grew from a tiny player in the global solar panel market five years ago to the world’s dominant producer now through a program of enormous lending by state-owned banks and a wide variety of manufacturing incentives by local and provincial governments. That has allowed Chinese producers to drive down the price of panels by three-quarters over the same period.

But Chinese manufacturers have expanded faster than the market, and the largest of them now face severe financial difficulties.

James Kanter reported from Brussels and Keith Bradsher from Hong Kong.

Solar Boat Harnessed for Research

Instead it is becoming a scientific research ship, at least for the summer. The boat, a 100-foot, $17 million catamaran that was dreamed up by a Swiss eco-adventurer and bankrolled by a German businessman, will cruise the Gulf Stream studying the role of atmospheric aerosols and phytoplankton in regulating climate, under the direction of Martin Beniston, a climatologist at the University of Geneva.

The research cruise, with five crew members and up to four researchers aboard, began in Miami several weeks ago and will stop in Newfoundland and Iceland as it tracks the northeasterly current. The voyage is expected to end in Bergen, Norway, in August.

Last week, the boat stopped in New York City for a few days on its way north. The squat carbon-fiber craft, its wide and flat top deck dominated by the photovoltaic array, looked a bit out of place among the luxury yachts and other more conventional nautical playthings docked at a marina near the city’s financial district.

In some ways the boat is suited to research. Being completely powered by the sun — the high-efficiency solar cells charge the batteries that power electric motors connected to the craft’s twin propellers — it produces no emissions of carbon dioxide or other gases that could contaminate air samples. And the boat has no problem going slowly, if necessary, as it samples the water — average speed is a sluggish five knots.

“But clearly, it’s not a research vessel,” said Bastiaan Ibelings, a microbial ecologist at the University of Geneva who is working on the project. The catamaran had to be outfitted with research equipment, including a “ferrybox,” originally developed for ferries in the Baltic Sea, that constantly records the temperature, salinity and other characteristics of the water the boat is passing through. It also has a “biobox,” developed by the university’s applied physics department, which uses a laser to analyze the number and type of aerosols in air samples.

The issue of ocean-generated aerosols — solid or liquid particles suspended in the atmosphere that can have an impact through cloud formation, reflection of sunlight and other processes — is a relatively new one in climate science, Dr. Beniston said. “We suppose that the ocean must be a fairly large contributor” of aerosols through the action of waves and wind, he said, but their abundance and how different types are distributed are fairly unknown. “Their exact role is still open to question,” he said.

The Gulf Stream is one of the most intensely studied ocean currents in the world, but Dr. Beniston’s plan is to examine some of its smaller-scale structures. These include eddies, swirling offshoots of the current (which, although they are smaller in scale than the entire Gulf Stream, can still be 200 miles or more in diameter). Eddies tend to have more upwelling of colder, deeper water than the Gulf Stream itself, so one goal is to see whether different water conditions produce different kinds of aerosols. With his plankton research, Dr. Ibelings wants to see whether the water conditions in eddies result in greater or less biological diversity than elsewhere.

The modifications to the catamaran — which also included new propellers and some remodeling of living quarters to provide work space for the researchers — were undertaken at a French shipyard after the boat ended its 19-month, 37,000-mile circumnavigation in May 2012. That voyage was intended more to demonstrate the general capabilities of solar energy than the practicality of solar-powered ships. (After all, vessels powered efficiently by alternative energy have existed for centuries. They’re called sailboats.)

“It’s an ambassador for solar energy,” said Gérard d’Aboville, Planetsolar’s current captain. “But I’d have to be crazy to say, let’s order 20 boats like this.”

Besides issues of cost and speed, Planetsolar poses some unique challenges. In addition to wind, waves and current, Mr. d’Aboville must constantly consider the amount of sunlight hitting the photovoltaic cells, with the goal of keeping the batteries as charged as possible in case of a long stretch of cloudy weather. (They can power the boat for about 72 hours when fully charged.)

He has a laptop computer on which he gets detailed, and constantly updated, maps from France’s national meteorological agency, Météo-France, showing the potential solar gain (calculated by taking into consideration cloud cover and other factors). If there’s a cloud on the horizon, he may decide to skirt it, figuring that he will gain more energy from the clearer skies than he’ll lose in making the detour.

“I have this new parameter of the sun, and it makes life interesting,” he said.

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Glut of Solar Panels Is a New Test for China

But now China’s strategy is in disarray. Though worldwide demand for solar panels and wind turbines has grown rapidly over the last five years, China’s manufacturing capacity has soared even faster, creating enormous oversupply and a ferocious price war.

The result is a looming financial disaster, not only for manufacturers but for state-owned banks that financed factories with approximately $18 billion in low-rate loans and for municipal and provincial governments that provided loan guarantees and sold manufacturers valuable land at deeply discounted prices.

China’s biggest solar panel makers are suffering losses of up to $1 for every $3 of sales this year, as panel prices have fallen by three-fourths since 2008. Even though the cost of solar power has fallen, it still remains triple the price of coal-generated power in China, requiring substantial subsidies through a tax imposed on industrial users of electricity to cover the higher cost of renewable energy.

The outcome has left even the architects of China’s renewable energy strategy feeling frustrated and eager to see many businesses shut down, so the most efficient companies may be salvageable financially.

In the solar panel sector, “If one-third of them survive, that’s good, and two-thirds of them die, but we don’t know how that happens,” said Li Junfeng, a longtime director general for energy and climate policy at the National Development and Reform Commission, the country’s top economic planning agency.

Mr. Li said in an interview that he wanted banks to cut off loans to all but the strongest solar panel companies and let the rest go bankrupt. But banks — which were encouraged by Beijing to make the loans — are not eager to acknowledge that the loans are bad and take large write-offs, preferring to lend more money to allow the repayment of previous loans. Many local and provincial governments also are determined to keep their hometown favorites afloat to avoid job losses and to avoid making payments on loan guarantees, he said.

Mr. Li’s worries appear to be broadly shared in Beijing. “For the leading companies in the sector, if they’re not careful, the whole sector will disappear,” said Chen Huiqing, the deputy director for solar products at the China Chamber of Commerce for Import and Export of Machinery and Electronic Products.

The Chinese government also wants to see the country’s more than 20 wind turbine manufacturers, many of which are losing money, consolidate to five or six. “Wind does not need so many manufacturers,” said Mr. Li, who in addition to drafting renewable energy policies is the president of the Chinese Renewable Energy Industries Association.

Chinese solar company executives blame their difficulties partly on the United States’s decisions last spring to impose antidumping and anti-subsidy tariffs on solar panel imports, and on the European Union’s recent decision to start its own antidumping investigation of imports from China.

“It is not a Chinese industry problem, it is a global solar industry problem,” said Rory Macpherson, a spokesman for Suntech Power, one of the largest Chinese solar panel manufacturers. “It is primarily the result of an imbalance between supply and demand, and the U.S. and E.U. trade investigations.”

Mr. Li said the solar industry’s problems were the result of overcapacity in China, and not the fault of trade restrictions.

Yet he insisted that if the Chinese government could turn back the clock and revisit past renewable energy decisions, it would not do anything differently.

The problem lies in the eagerness of Chinese businesses to rush into any new industry that looks attractive and swamp it with investments, he said. Chinese companies and their bankers are then far more reluctant than Western companies to admit defeat for investments that prove unprofitable.

Mr. Li added that banking regulators had not yet decided what to do about banks’ exposure to the solar sector. The central government tried without success to learn from local and provincial government agencies how much of the solar industry’s bank debt they have guaranteed, Mr. Li said.