Germany long aimed to be a front runner in the solar energy industry, but waning subsidies and rising competition from China have clouded its outlook. To add insult to injury, the Chinese boom has been generously supported by German financial aid.
It was a bad week for Germany's crisis-ridden solar industry. First the government announced plans to slash subsidies for electricity from solar energy. Then the share prices of solar-panel makers plunged. Finally, after several rainy days in a row, the outlook for Germany's solar economic miracle, long enthused about by Environment Minister Norbert Röttgen, now seems worse than ever before.
The environment minister with the center-right Christian Democratic Union (CDU) is aware who is principally to blame for the plight of the German solar industry: the Chinese. The emerging economy's dumping policy has led to ruinous competition in the global market for solar panels, Röttgen said last Thursday, when he accused the Chinese of pursuing a "pricing policy designed to displace German companies." Thanks to generous Chinese government subsidies, he added, the competition is able to "obtain almost unlimited capital."
It is indeed true that Asian low-wage manufacturers have access to funding sources to which German companies do not. Those sources include the German government's budget for development aid, as well as the budgets of government institutions that aim to promote what the environment ministry calls "global climate justice" in its brochures. More than €100 million ($134 million) in government subsidies have already reached China from Germany, partly along circuitous routes, to bolster an industry that has already become the dominant global market player in some areas.