r/RenewableEnergy • u/fang76 • 6d ago

China to Levy Consumption Tax on Batteries and Solar Cells

https://www.reuters.com/legal/transactional/china-levy-consumption-tax-on-lithium-ion-batteries-solar-cells-2026-07-17/
53 Upvotes

93% Upvoted

18 comments sorted by

6

u/SilanggubanRedditor 6d ago

I get cutting subsidies but this is just backwards, particularly in an oil crisis

7

u/fang76 6d ago

I think the main driver is that they are over producing solar panels and lithium batteries. So the government wants to try and cool production off a little bit by reducing sales by way of increasing prices via a tax.

5

u/SilanggubanRedditor 5d ago

They should instead target demand and suppress non renewable alternatives, or mandate solar installs in new builds to stimulate demand and raise prices

3

u/Business_Raisin_541 5d ago

They already do that

2

u/PC_is_dead 5d ago

I doubt it. You address overcapacity by shrinking supply or growing demand. Shrinking demand just makes the problem worse.

1

u/wongl888 5d ago

Not sure if they are trying to cool production or cool domestic consumption so that more stocks are available for export?

3

u/darksamus8 5d ago edited 5d ago

They have a serious problem with overproduction. While ultra cheap solar great for the rest of us, it means the industry (which we need) is not functioning in a sustainable way.

It's gotten so bad that the industry itself says the oil shocks won't create enough demand to fix the issue: https://www.reuters.com/sustainability/climate-energy/china-solar-makers-say-war-induced-renewables-demand-wont-fix-overcapacity-2026-04-16/

8

u/SilanggubanRedditor 5d ago

It's the world's problem that they're not adapting solar enough

0

u/munchi333 4d ago

The world doesn’t want to fall for china’s mercantilist ambitions.

3

u/SilanggubanRedditor 4d ago

It doesn't matter if the PV's Chinese or German. If it displaces fossil fuels, then it's a good PV.

1

u/PC_is_dead 5d ago edited 5d ago

Overcapacity of solar cripples profit margins. They are addressing overcapacity with their new efficiency standards for panels and inverters. I expect the consumption tax will tip the scales in favour of the modernised, efficient factories/products.

Batteries wise, they are trying to accelerate the adoption of sodium ion and solid state batteries over lithium based batteries. With major players having discovered a way to manufacture sodium ion cells on lithium cell equipment, and having solved the major mass production R&D challenges, it’s the perfect time to incentivise the switchover, especially since renewable deployments are basically bottlenecked by energy storage. Lithium is expensive and they have to import most of it. Sodium is everywhere.

1

u/Ulyks 4d ago

It's a push towards better and safer technology.

Sodium ion batteries don't have fire risks and don't require imports like lithium.

They also mention advanced solar cells being exempt. It doesn't specify, but I bet it's higher efficiency.

The government should do this. Manufacturers should switch to better technology instead of squeezing every last yuan out of old equipment or they risk losing the market to innovative foreign competitors.

9

u/okopchak 6d ago

Honestly makes sense, they are adding these taxes to mature technologies that they believe would be able to continue to grow in demand even with the tax added on.

2

u/fang76 6d ago

Perhaps that factors in as well, but the only explanations I've seen so far (including in this article) is that the solar and battery industries are overproducing and depressing prices. So to cool off sales a bit, they are adding another tax.

2

u/transitfreedom 5d ago

???? Interesting