Shaping the Future of Solar Power: Climate Change, Industrial Policy and Free Trade

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  • Product Description

    Abstract:
    When Solyndra, a California-based solar panel maker, filed for bankruptcy in 2011, the U.S. government was left with more than half a million dollars in unpaid debt. The bankruptcy was a major embarrassment for the Obama administration which had touted renewable energy companies like Solyndra as the wave of the future, and had invested billions of dollars in government loan guarantees to promote them. The Chinese government, however, had outpaced the U.S. in providing loan guarantees and subsidies to solar manufacturers and helped transform the country’s nascent solar manufacturing industry into a world leader. Chinese dominance in the solar market ultimately triggered a high-stakes trade war between the United States and China but neither country could contain the massive downturn in the solar market that began in 2012.

    The case provides an in-depth account of the complex and often competing agendas on climate change, industrial policy and free trade which fueled the politically charged trade battles between the U.S. and China. Against the backdrop of the global environmental challenge, the case includes details on the Obama administration’s signature energy subsidy program and the factors that led to Solyndra’s collapse. It also traces the rise of China’s solar industry as well as the trade complaints made by the U.S. against China at the World Trade Organization and the subsequent Department of Commerce decision to impose penalties against Chinese solar panel makers.

    Learning Objective:
    The rapid rise and sudden downturn of the solar industry in the U.S. and China offer insights into the political realities that fuel industrial policies. Students examine the role of governments in supporting industries and how effective they can be in picking winners. By analyzing the trade wars between the U.S. and China, students explore the interplay between the global trading system and climate policy and seek optimal policy solutions for addressing climate change.

  • Other Details

    Publication Date: May 16, 2013
    Teaching Plan: Available with Educator Access
    HKS Case Number: 1992.0
    Case Author: Anjani Datla
    Faculty Lead: Robert Lawrence
    Pages (incl. exhibits): 15
    Setting: China
    Language: English
    Funding Source: Joseph B. Tompkins, Jr. Fund for Case Study and Research
    _year: 2010-2015
    _pages: 1-15
    _geography: Asia
  • Warranty Information

    /review/1992.0.EducatorCopy.pdf, /teachingplan/1992_2.pdf

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