Chicago economist John Cochrane:
It's time to start a new series on “energy idiocy.” You just can't make this stuff up… From today's WSJ:
BRUSSELS—Chinese solar-panel manufacturers will face import tariffs of up to 67.9% at European Union borders under a plan from the 27-nation bloc's executive body…
Europe, like the US, subsidizes the installation of solar panels. So, we subsidize things to make the prices to consumers go down and encourage the industry. Then when the industry is encouraged and prices do go down, we pass tariffs to make prices go up. This is almost as fun as oil, which we subsidize to make prices go down, then pass regulations to try to stop people from using it.
The US doesn't get to indulge in any Europe bashing here, The U.S. has already placed tariffs on solar-panel imports from China.
We also subsidize ethanol, but only from midwestern corn. We have tariffs against ethanol from Brazilian sugar cane, which is a whole lot better environmentally (is a lot less closer to using 1 btu of petroleum to produce 1 btu of ethanol, wash away topsoil and fertilizers down the Mississippi, drive up corn prices)* but seems not to show up at the Iowa caucuses.
Of course it was a bit of a miracle that prices came down in the first place. Usually, subsidizing and protecting an industry in the idea that just making it bigger makes it cheaper leads to large inefficient industries. The correlation between big and cheap comes from competition. Hence revealing that it was the Chinese who figured out how to exploit European subsidies and actually make panels cheaper.
Please read the whole thing – this is just a teaser.