Protecting Solar: Global Supply Chains and Business Power

Abstract

Governments invested substantially in renewable energy industries in responding to climate change, while seeking to promote economic growth. They also engaged in a series of major trade disputes, notably in the solar photovoltaic and wind sectors. The European Union (EU)– China solar dispute is one of the largest such cases. In 2013, the European Commission (EC) announced duties on imports of solar products from Chinese manufacturers. This decision was at odds with the fact that the majority of the European solar industry opposed tariffs. We propose that the decision was affected by a shift in negotiating power between business and the EC. We suggest that the rise of global supply chains undermined the structural power of industry by dividing manufacturers over trade policy and by fragmenting the information conveyed to policy-makers. This provided an opportunity to the Commission to engage in ‘interest shopping’ by selecting an industry position that matched its own interest. Evidence from a comparative case study on EU and German responses to solar imports supports our argument. The findings suggest that the globalisation of production can strengthen the negotiating power of policy-makers, and implies that policy-makers face new trade-offs at the intersection of manufacturing and climate policy.