WASH POST CHINA STORY OPENS BIG OPPORTUNITY IN SOLAR

In a March 4 post, SOLAR CELLS BEAT FOSSIL FUELS AGAIN, NewEnergyNews reported on a new study finding solar cell manufacturing to be 90% cleaner than plants powered by fossil fuels. It is safe to say the good news failed to shake anything up anywhere.

On the other hand, a March 9 story in the Washington Post about a bunch of environmental criminals in China who irresponsibly dump the toxic manufacturing byproducts of solar energy cell materials set the stock market atwitter the following day.

Smart investors no doubt saw the story for the sensationalist investigative reporting it was and held their solar energy stocks. Others panicked and sold at a loss as stock prices dropped. Within 2 days, most solar energy stocks had begun regaining their value. The best companies were priced higher than they had been at the beginning of the week as smart investors no doubt saw an opportunity to buy at artificially low prices.

The Post reporter likened the toxic waste dumping by the one company it investigated to the widespread deforestation by palm oil producers in Indonesia and the ruination of ecosystems from giant hydropower dams built by the Chinese government. There is no comparison.

Deforestation is typical of palm oil producers and is done while the Indonesian government tacitly looks the other way because the world has until this year refused to offer incentives to save the forests. The dams were built at the consent of a Chinese government forced to choose between electricity and environment. This toxic dumping is the result of sudden, out-of-control growth in the Chinese silicon industry. 20+ companies are set to almost overnight expand polysilicon manufacturing capacity to twice what world capacity is at present.

Dumping is not the practice of manufacturers in the west. The Chinese government may be tolerating it now. But just as the U.S. once silently tolerated the dumping of sludge by U.S. mountaintop removal coal miners but finally reacted, this toxic dumping is not a practice likely to be long tolerated without objection.

How long will it go on? The dumping of toxic byproducts into U.S. rivers and lakes by the petroleum industry was so common and so widely tolerated in the first half of the last century that many states are still discovering dangerous black waters in need of quarantine and clean-up. Chinese silicon industry dumping is not likely to be tolerated as long.

Western polysilicon manufacturers recycle the toxic waste back into the production process. China’s companies will eventually be able to do the same. Shi Jun, former photovoltaic technology researcher, Chinese Academy of Sciences/ chief executive, start-up polysilicon manufacturer Pro-EnerTech: "The recycling technology is of course being thought about, but currently it's still not mature…If this happened in the United States, you'd probably be arrested…"

Complicating factors: (1) Local Chinese officials, thinking more about economic development than environmental health, are in denial about the severity of the problem or may have purposely looked the other way. (2) The plant reported on was built with inadequate knowledge of polysilicon manufacturing technology because western proprietary knowledge was withheld to protect intellectual property. (3) Processing equipment more than doubles the price of production. (4) Demand for their product is so high, the plant owners cannot work fast enough.

Not all are guilty of toxic dumping. Some are simply storing the stuff until they can install the proper processing equipment. The manufacturers who are dumping are in the wrong and that’s all there is to it. They know what they have to do. Shi Jun, former photovoltaic technology researcher, Chinese Academy of Sciences/ chief executive, start-up polysilicon manufacturer Pro-EnerTech: "Theoretically, companies should collect it all, process it to get rid of the poisonous stuff, then release it or recycle. Zhonggui currently doesn't have the technology. Now they are just releasing it directly into the air…"

The villagers in the region of the criminal plant are suffering and the perpetrators should be dealt with. Plaudits to the Post for its investigation. And profits to the investors who, undaunted by a sensationalist headline, held their ground or even improved their position on investments likely to keep going up for the foreseeable future.
(For Frenchie)

Unprecedented demand is driving a booming market. Random bad actors can be expected. No complaints have been raised against industry leader Missouri-based MEMC. Buy. (click to enlarge)

Update: Solar Shares Crushed On Washington Post Report On Chinese Polysilicon Company Dumping Toxic Waste
Eric Szvitz, March 10, 2008 (Tech Trader Daily via Barron’s)
and
Solar Energy Firms Leave Waste Behind In China
Ariana Eunchung Cha, March 9, 2008 (Washinton Post)

WHO
The Washington Post, Luoyang Zhonggui High-Technology Co., SunTech (STP), China Sunergy (CSUN), LDK Solar (LDK)

You know what they say about sausage? (click to enlarge)

WHAT
After the Post reported that Luoyang Zhonggui High-Technology, manufacturer of polysilicon used in solar energy panels by SunTech (STP), China Sunergy (CSUN), LDK Solar (LDK) and possibly others, disposes dangerously and destructively of silicon tetrachloride, a highly toxic byproduct, shares of solar energy companies fell.

WHEN
- The Post story run March 9.
- Stocks prices March 10 and March 12:
SunTech (STP) fell $2 March 10, or 5.9%, to $32.07; March 12: $32.67
China Sunergy (CSUN) fell 39 cents March 10, or 5.7%, to $6.49; March 12: $6.96
LDK (LDK) fell 99 cents March 10, or 4.4%, to $21.50; March 12: $20.43
Canadian Solar (CSIQ) fell $3.07 March 10, or 15%, to $17.41; March 12: $18.88
Trina Solar (TSL) fell $3.48 March 10, or 11.1%, to $28.02; March 12: $27.87
Yingli Green Energy (YGE) fell $2.10 March 10, or 13.7%, to $13.19; March 12: $14.94
Solarfun (SOLF) fell $1.15 March 10, or 11.4%, to $8.97; March 12: $9.67
First Solar (FSLR) fell $20.25 March 10, or 10.3%, to $176.57; March 12: $205.88
MEMC Electronic Materials (WFR) fell $1.69 March 10, or 2.3%, to $72.42; March 12: $79.34

click to enlarge

WHERE
Luoyang Zhonggui High-Technology is in the central plains of Henan Province near the Yellow River. The owners and/or the operators should be in jail.

WHY
- Energy is in high demand in China.
- Chinese polysilicon manufacturing is booming. Venture capital, grants and low-interest loans are flooding in. 20+ Chinese companies are starting plants. The new capacity (80,000 to 100,000 tons) is twice current world capacity (40,000 tons).
- Polysilicon has gone from $20 per kilogram to $300 per kilogram in 5 years. In a market like that, bad behavior may be rewarded in the short term. Dumping toxic chemicals is criminal and even a nation as polluted as China will eventually earn its just punishment.
- 1 ton of polysilicon generates 4+ tons of silicon tetrachloride liquid waste which, in air, turns into acids and poisonous hydrogen chloride gas.

The Post reporter wrote an admirable investigative piece documenting dreadful behavior. Environmental criminals, be they toxic dumpers or mountaintop removal coal miners, must be dealt with. Don't expect the solar energy industry to slow down for long if the U.S. Congress acts. (click to enlarge)

QUOTES
- Ren Bingyan, professor, School of Material Sciences at Hebei Industrial University: "The land where you dump or bury it will be infertile. No grass or trees will grow in the place. . . . It is like dynamite -- it is poisonous, it is polluting. Human beings can never touch it…"
- Li Xiaoping, deputy director, Shanghai Academy of Environmental Sciences: "Crops cannot grow on this, and it is not suitable for people to live nearby…"
- Qiao Shi Peng, 28, a truck driver: "It's poison air. Sometimes it gets so bad you can't sit outside. You have to close all the doors and windows…"
- Li, 53, lives with son and granddaughter in a village near the Luoyang Zhonggui High-Technology factory: "…they go outside the gates of their own compound to dump waste…We didn't know how bad it was until the August harvest, until things started dying…"
- Zhang Zhenguo, 45, farmer/small businessman, on why the local government did not test the toxic waste: "They didn't test it because the government supports the plant."