The race to 'clean tech' bankruptcy

Tim Carney:

What happens when China and the United States clash in a subsidy-fueled solar panel arms race? The world gets a lot more solar panels than anyone wants to buy, manufacturers go bankrupt, and taxpayers get stuck with the tab.

Will the recent bankruptcy of subsidized Chinese solar giant Suntech Power cause the Obama administration to tone down its argument that we need to match China's solar policy?

"As long as countries like China keep going all in on clean energy, so must we," President Obama said in his 2013 State of the Union. This is a typical refrain in Obama's industrial policy.

In a 2010 address at Georgetown calling for more green energy subsidies, Obama said "the countries that lead the 21st-century clean energy economy will be the countries that lead the 21st-century global economy. I want America to be that nation. I want America to win the future."

John Kerry, now Obama's secretary of state, has sounded the same note for years, saying in 2011: "[W]e should be thinking about competing with China to win the next energy revolution. Why? Because the race is on to put the right policies in place so hundreds of thousands of new, good-paying renewable energy jobs will be created here, and not in China."

There's some interesting economics and rhetoric going on here. On one level, the Obama-Kerry line is not so different from the 1970s-vintage liberal view that America needs to emulate Asia and Europe. But that sort of talk doesn't fly with the average American swing-state voter, and so Obama has turned the rhetoric on its head: We can't let China or Europe beat us at solar panels!

But this skips a question that needs asking: Why should we want to win the solar panel-making race? If China wants to sell us subsidized solar panels, why should we begrudge them that? And if solar panel factories need subsidies in order to survive, doesn't that signify that this industry doesn't add value to the economy?

This month's Suntech Power bankruptcy is the latest piece of evidence that the solar arms race is not one worth winning.

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There is much more.

The subsidies are leading to over production which is driving down prices which is leading to bankruptcy even with subsidies.  The solar panels produce inefficient energy which is still overpriced compared to more efficient energy such as natural gas.  If China is foolish enough to subsidize this conduct why should the US be foolish enough to follow their lead.  Solar panels are part and parcel of the green energy industrial complex Obama is trying to build and failing miserable.  We have seen similar failure in electric autos and battery production.  The wind energy business is one where even sophisticated investors have "lost their ass."