ESMC calls for EU protection measures for the solar industry, even including tariffs if necessary

The ESMC, an association representing nearly 80 European companies covering almost the entire value chain of the solar industry, has called on the European Union (EU) to implement immediate protective measures. In a letter to the European Commission on January 30th, the ESMC stated that without these measures, the EU will lose over 50% of its modern production capacity for PV modules. If the measures are not adopted within the next two months, the ESMC advocates for “necessary trade protection measures,” which in other words means import tariffs.

The immediate problem identified by the ESMC is an oversupply of subsidized PV modules from China. Currently, European ports and warehouses are storing PV modules with a capacity of 70 to 85 gigawatts (GW). This oversupply is the result of an aggressive strategy by the Chinese industry, leading to a decline in module prices and large unsold inventories among European PV manufacturers. “Now is the moment of truth when the European Commission and member states need to hold onto the strategic stance that the EU must not become fully dependent on the import of PV solar modules,” said Žygimantas Vaičiūnas, Policy Director at ESMC.

The ESMC has formulated a package of measures aimed at averting the downfall of the solar industry. Specifically, the ESMC is calling for:

• The purchase of accumulated inventories within the EU. 
• An amendment to the Temporary Crisis and Transition Framework (TCTF) to enable financing of projects with PV modules from the EU or operating expenses of EU solar module manufacturers. 
• The accelerated implementation of PV-relevant parts of the Net-Zero Industry Act (NZIA) and the Forced Labour Regulation (FLR) by temporarily establishing a simplified system for resilience auctions.

According to the ESMC, these measures should be implemented as a package and on a temporary basis. They aim to stabilize the situation for EU PV module manufacturers, prevent further impacts on related sectors, and provide breathing space for EU PV manufacturers during the transition period in the next two to three years. The ESMC expects the Net Zero Industry Act and the Forced Labour Regulation to come into effect during that time.

The ESMC acknowledges that lower prices for PV solar modules could have a positive impact on the deployment of photovoltaics. However, the current prices are below Chinese production costs and cannot be considered the new normal. Any comparison with European PV solar modules should be based on sustainable production costs and reasonable profit margins.

As a last resort, if the EU does not implement the requested measures, the ESMC sees import tariffs as a means to protect the solar industry. The association hints at potentially filing a corresponding request with the EU. If the ESMC can demonstrate a link between dumping prices for Chinese modules and harm to the European PV industry, an investigation process will be initiated by the EU, which may result in the imposition of import tariffs.

“The potentially critical decisions should be made today, as otherwise future generations will be affected, and the EU’s efforts towards a sustainable and resilient energy future will be seriously undermined,” concluded Johan Lindahl, Secretary-General of the ESMC.