China and the United States should partner to create a regional super grid in Asia and North America, which could help de-escalate an impending trade war, a senior US energy adviser said.

“If China and the US are both leaders in solar, it will enhance better penetration of renewable energies around the world,” Varun Sivaram, a science and technology fellow at the Council on Foreign Relations, said on Tuesday on the sidelines of a solar talk themed “The Future of Solar Energy and the Role of American Leadership” at the Atlantic Council.

He warned about the inconveniences that a solar tariff would cause for US families, and expressed concerns over the negative implications that a wide-ranging package of tariffs would have for the US economy and bilateral trade relations.

US President Donald Trump on Thursday signed a tariff plan on an estimated $60 billion worth of Chinese imports, following the administration’s steel and aluminum tariffs that took aim at China.

The administration announced in January tariffs on imported solar panels, with the objective of protecting domestic manufacturing.
The announcement faced a backlash from solar industry workers, who fear tens of thousands of layoffs.

Research firm Wood Mackenzie estimated that tariffs would reduce US solar installation growth by 10 to 15 percent over the next five years, according to Reuters.

“Tariffs are bad for American jobs. They are useless for innovation. They won’t help domestic manufacturing,” Sivaram said.

Tariffs are the latest manifestation of Trump’s “great preoccupation” that the US is losing much of its leadership to China and other countries in the solar industry, Sivaram said.

Domestically, solar energy has seen the fastest growth in Mississippi, South Carolina, Minnesota and Virginia, said David Livingston, deputy director for Climate and Advanced Energy at the Global Energy Center at the Atlantic Council.

Solar accounted for 1.3 percent of US electricity generation in 2017, compared with China’s 0.5 percent share, according to the US Energy Information Administration.

Internationally, China is dominating solar panel production. Eight of the top 10 solar panel manufacturers are from China, with Jinko Solar and Trina Solar occupying the top two places, according to a global shipment volume ranking provided by PV Tech.org.

Liu Zhenya, then chairman of China’s State Grid Corp, outlined a $50 trillion “supergrid” plan in 2016, which called for long-range transmission lines to create a world grid that incorporates wind and solar energy.

“The US should invest in grid expansion. We should build long transmission lines, which we struggled to do so. That’s where China has done better,” Sivaram said.

Financial funding is another pronounced difference between China and the US.
Chinese funding, mostly being public, is not as commercial as its American counterpart, which raises plenty of capital through private equity, according to Jigar Shah, co-founder and president of Generate Capital Inc.

Sivaram said that is “exactly China’s core competency” when it comes to infrastructure building.

“China is able to marshal large amounts of public funding and use that to support infrastructure building around the world,” said Sivaram. “In doing so, China is able to acquire a great deal of geopolitical influence,” he said.
Bloomberg forecast in its New Energy Outlook 2017 that China will invest heavily in renewables, with wind and solar capacity increasing eightfold by 2040. Asia Pacific will see almost as much investment in clean energy generation as the rest of the world combined, the report said.

Guo Fengqing in Washington contributed to this story.