Trade Policy and Energy Decarbonization - Assessing the Impact of the Eu's Trade Defense Measures Against Chinese Solar Panels

The deployment of renewable energy is crucial to the achieving of global climate goals outlined in the Paris Agreement. Many countries have adopted industrial policies designed to promote the growth of new industries for manufacturing renewable energy equipment. However, such policies may contradict national and global energy transition goals. This paper studies the nexus between solar energy adoption and trade policy in OECD countries for the period 2011 to 2018. We treat the anti-dumping and anti-subsidy (ADAS) duties on Chinese manufactured solar PV panels imposed by the European Union in 2013 as a quasi-natural experiment for testing the impact of trade defense policy on energy transition. Using a difference-in-differences strategy, we find that the EU countries could have had an additional expansion of about 0.31%-0.34% per annum in the share of solar energy in total electricity generation had they not imposed these duties. This is significant, as the average annual increase in the solar energy share of total electricity production in the EU during the same period was 0.14%. Our results also suggest that the decrease of the solar share in the EU member states is due to the slower expansion of solar energy capacity and a decrease in imports of solar-related equipment from China. This finding highlights the importance of trade policy to global energy transition and the urgency of formulating proper trade rules for environmental goods.