China Ahead in Solar Race & Toxic Waste

The bankruptcies of three
American solar power companies in the last month, including Solyndra of
California, have left China’s industry with a dominant sales position — almost
three-fifths of the world’s production capacity — and rapidly declining costs. Meanwhile,
China’s environmental watchdog will suspend reviews of all new industrial
projects in Qujing, Southwest China’s Yunnan province, until the city cleans up
its toxic chromium slag and remedies polluted soils. Pictured are the 20,000 Suntech
solar panels on the Hongqiao Station of the Beijing-Shanghai High-Speed Railway

By KEITH BRADSHER for New York
Times, 1 September 1, 2011

HONG KONG — The bankruptcies of
three American solar power companies in the last month, including Solyndra of
California on Wednesday, have left China’s industry with a dominant sales
position — almost three-fifths of the world’s production capacity — and rapidly
declining costs.

Solar panel inspection at a
factory in Hangzhou, Zhejiang province. Chinese companies’ cost advantages
overwhelm any lags in technology, analysts say.

Some American, Japanese and
European solar companies still have a technological edge over Chinese rivals,
but seldom a cost advantage, according to industry analysts.

Loans at very low rates from
state-owned banks in Beijing, cheap or free land from local and provincial
governments across China, huge economies of scale and other cost advantages
have transformed China from a minor player in the solar power industry just a
few years ago into the main producer of an increasingly competitive source of
electricity.

“The top-tier Chinese firms are
kind of the benchmark now,” said Shayle Kann, a managing director of solar
power studies at GTM Research, a renewable energy market analysis firm based in
Boston. Pricing of solar equipment is determined by the Chinese industry, he
said, “and everyone else prices at a premium or discount to them.”

Besides Solyndra, the other two
American manufacturers that filed for bankruptcy in August were Evergreen
Solar, of Massachusetts, and SpectraWatt, a New York company. Another company,
BP Solar, halted manufacturing at its complex in Frederick, Md., last spring.

Those bankruptcies and closings
represent almost one-fifth of the solar panel manufacturing capacity in the
United States, according to GTM Research.

Solyndra and Evergreen in
particular suffered because they pursued unusual technologies whose
competitiveness depended on their using less polysilicon, the main material for
solar panels. That has become less important because polysilicon prices have
tumbled more than 80 percent in the last three years as output has caught up
with demand.

Analysts say that two American
companies remain strongly placed. One is First Solar, the largest American
manufacturer, which uses a different technology but has its biggest factory in
Malaysia. The other, SunPower, is much smaller but is an industry leader in the
efficiency with which its panels convert sunlight into electricity, so that
they sell at a premium to Chinese panels.

But with Beijing heavily
supporting its industry, the Chinese companies are forging ahead.

“There is no question that
renewable energy companies in the United States feel pressure from China,” said
David B. Sandalow, the assistant secretary for policy and international affairs
at the United States Energy Department. “Many of them say it is cheap capital,
not cheap labor, that gives Chinese companies the main competitive advantage.”

China’s three biggest solar power
companies — Suntech Power, Yingli Green Energy and Trina Solar — have all in
the last two weeks announced second-quarter sales increases of 33 to 63 percent
from a year earlier.

Yingli and Trina were also
profitable in the quarter. Suntech posted a loss, mostly because it broke a
longstanding agreement to buy solar wafers — critical components in the
manufacturing process — from a Singapore affiliate of MEMC Electronic Materials
of Missouri. Suntech aims to make more wafers itself.

Shares in large and small Chinese
solar power companies have mostly rallied in the last two weeks on the New York
and Hong Kong stock markets, as investors have welcomed their strong quarterly
results and the prospect of dwindling competition from Western rivals. Besides
the bankruptcies in the United States, solar power companies in Germany,
another big producer, have been laying off workers and retrenching.

The recent strength of Chinese
stocks “truly reflects the low cost base of the Chinese solar manufacturers,
and it is great to see their positioning, particularly relative to their
American and European counterparts,” said K. K. Chan, the chief executive of
Nature Elements Capital, a Chinese clean energy investment company based in
Beijing.

He attributed the Chinese
industry’s low costs not to inexpensive labor in China — high-technology solar
panel manufacturing is not labor-intensive — but rather to free or subsidized
land from local governments, extensive tax breaks and other state assistance.

Solar panel prices have plunged
by 30 to 42 percent per kilowatt-hour in the last year as manufacturers have
sharply increased capacity, particularly in China. Meanwhile, demand has been
somewhat weak in the main markets in the United States and Europe.

Costs for electricity generated
by utility-scale solar installations now approach costs for natural gas in some
markets, like California’s, when subsidies of as much as 30 percent of the
price are included. However, costs remain well above the cost of electricity
from coal.

The United States and the
European Union have tried to build demand for solar power by subsidizing the
buyers of solar panels. But increasingly those subsidies are being used to buy
solar panels from China.

The Chinese government has
pursued a different policy course. Instead of subsidizing the purchase and use
of solar power, China has focused on building the competitiveness of the
country’s manufacturers. As a result, China exports 95 percent of the solar
panels it produces. The United Steelworkers union filed a legal complaint a
year ago with the United States government, asking the Obama administration to
investigate China’s clean energy subsidies and other policies and to bring
cases against them at the World Trade Organization. The organization’s rules
strictly prohibit export subsidies, to prevent countries from buying market
share in foreign markets for their producers.

The administration did challenge
one Chinese government practice: giving subsidy grants of $6.7 million and $22.5
million to Chinese wind turbine manufacturers that agreed not to buy imported
components.

China agreed in June to
discontinue the practice, but by then it had already built the world’s largest
wind turbine manufacturing industry over the last five years and now has highly
competitive Chinese producers for almost every component.

Nkenge L. Harmon, a spokeswoman
for the United States trade representative’s office, said on Thursday that the
agency’s investigation continued into whether other Chinese green energy
policies might violate W.T.O. rules.

Source www.nytimes.com

By Li Jing (China Daily)

2 September 2011

BEIJING – The country’s
environmental watchdog will suspend reviews of all new industrial projects in
Qujing, Southwest China’s Yunnan province, until the city cleans up its toxic
chromium slag and remedies polluted soils, a senior official said on Thursday.

The Ministry of Environmental
Protection is also preparing to launch a nationwide campaign to target illegal
dumping and stockpiling of hazardous waste before the end of this year,
according to Zhang Lijun, deputy minister of environmental protection.

Enterprises involved in the
production of chromium and polycrystalline silicon, and in the disposal of
sewage sludge and electronic waste will be placed under special scrutiny, he
added.

Under Chinese law, all industrial
projects must undergo environmental reviews before being approved for
construction. The regional ban for Qujing, which will put a brake on its
economic expansion, came as a punishment after a local chemical plant illegally
dumped more than 5,000 tons of highly toxic waste in June.

The dumping contaminated nearby
water sources, caused the deaths of livestock and threatened the safety of drinking
water for cities downstream.

“This is not an isolated
case. It reflects a widespread oversight on the treatment and disposal of
hazardous waste in the country,” said Zhang.

The large amounts of toxic
industrial waste are polluting soils and water sources, and posing threats to
public health, he said.

The latest national pollution
census, in 2007, showed the country produced 45.74 million tons of hazardous
waste that year. During the 12th Five-Year Plan (2011-2015), the amount is
expected to increase at an annual rate of 5 to 7 percent, as the country’s
demand for industrial materials will continue to grow, Zhang said.

“However, every year, only
about 8 million tons receive proper treatment, less than 20 percent of the
total amount,” he said.

Zhang cited limited treatment
capacity, the high cost of proper disposal and slack supervision by
environmental authorities as causes of the failure to control the use of
dangerous chemicals.

The ministry set the end of 2012
as a deadline for all chromium plants to properly treat all of their stockpiled
slag. Toxic waste produced after 2006 has to be cleared up by the end of this
year. Those who fail to meet the deadlines will be ordered to halt production.

An independent investigation by
environmental organization Greenpeace shows that there are still more than
140,000 tons of chromium slag stockpiled at Yunnan Luliang Chemical Industry,
the polluting company in Qujing.

Tests showed that the groundwater
near the plant has an extremely high concentration of carcinogenic sexivalent
chromium. Nearby villagers have complained about a higher than normal rate of
cancer in their communities.

Some environmentalists welcomed
the ministry’s move.

Ma Tianjie, a toxics campaigner
from Greenpeace, said: “The timetable to properly dispose of stockpiled
toxic waste is very important. But it is also essential for the ministry to
disclose relevant information so the public can participate in the
supervision.”

Source: www.chinadaily.com.cn