Solar Products Classification
Solar
energy is booming at the moment. Generating capacity from solar panels has
increased by 50 percent per year since 2005. More recently, a wide variety of
solar lights, lighting sets and solar home systems have been developed that
provide affordable, off-grid electricity access for millions of people.
International trade in solar products is now over US$25 billion per year, but
the codes used to classify trade (the Harmonized System or HS) have not kept
pace with these recent developments. To improve the situation, the
International Renewable Energy Agency (IRENA) is proposing changes to the HS
codes used for solar products and is seeking support for these changes from
countries represented at the World Customs Organization (WCO).
Over
the last decade, the production and use of renewable energy has increased
substantially and solar energy has been at the forefront of this energy
revolution. The benefits of renewable energy are now recognised
in the 140 countries that have national renewable energy targets and, at the
international level, in the Sustainable Development Goal (SDG) for energy.
However, with the rapid increase in the use of solar energy, especially in
off-grid applications, it is becoming increasingly difficult to measure
progress towards meeting these targets.
The
Harmonized Commodity Description and Coding System is an internationally
standardised system of codes and product descriptions used to classify traded
products. It is used as a basis for setting tariffs and other trade-related
measures and as a framework for the collection of international trade
statistics. At present, most solar technologies are included as part of broader
product groups within the HS and the descriptions do not reflect the variety of
different solar products that are now available.
Solar cells account for most international trade in
solar products, with total imports of at least US$25 billion in 2015. Solar
cells may be traded as panels or modules or as cells that will be assembled
into panels in countries. With only a handful of countries manufacturing solar
cells, most countries import the cells or panels that they need. This trade is
currently recorded as imports of photosensitive semiconductor devices (HS Code
854140), which also includes trade in LEDs and other devices.
Imports of solar water heaters amounted to at least
US$163 million in 2015. This trade is recorded as part of a broader group of
water heating products (HS Code 841919), where it accounts for at least 10
percent of all trade in the group and possibly much more.
Solar lights, lighting sets and solar home systems
cover a range of solar-powered products that provide basic energy services.
These products are becoming increasingly popular in countries where few people
have access to on-grid electricity. Imports of these products are not easily
measured, because they can be imported under many different codes. However, the
information that is available suggests that imports were at least US$50 million
in 2015. These figures are confirmed by recent market research from the Global
Off-Grid Lighting Association (GOGLA), which shows that annual sales have
increased from almost nothing five years ago to about 7 million units in 2015.
To
clarify trade in solar products, IRENA has proposed three main changes to the
structure of HS codes. The first is to separate solar cells and solar water
heaters from the broader product groups where they are currently placed. The
second is to create two specific codes for solar lights and lighting sets, to
reduce uncertainty about how these products should be classified. The third is
to create three codes for photovoltaic generators, to separate trade in these
products from trade in other generators and create a place in the
classification for solar home systems. Changes to the product descriptions in
the HS Explanatory Notes have also been proposed to describe more clearly the
differences between solar panels and generators and the different types of
solar lights, lighting sets and solar home systems.
Changes
to the HS codes are expected to lead to two major benefits. The first is to
facilitate trade by clarifying the codes that should be used when shipping
products. This is particularly important for the more complex products, where
manufacturers have reported a lot of variation in the codes used by countries.
Greater clarity should also help the many countries that want to promote solar
energy by lowering tariffs on these products.
The second benefit will come from improved trade
statistics. Many countries find it difficult to measure off-grid electricity production
and are underestimating solar energy production and electricity access. As many
countries import all of these products, improved trade statistics will help
them to monitor their progress towards meeting renewable energy targets and the
SDG for energy.
The
HS is revised every 5 years and the WCO has just started the next review cycle.
This proposal will be presented at the next review meeting at the end of May
2017. If readers would support the changes outlined here, they could provide valuable
assistance by contacting their delegates to the WCO and asking them to support
this proposal when it is discussed. IRENA is also happy to provide a copy of
the proposal and answer any questions that readers may have.
Adrian
Whiteman is Chief Statistician at the International Renewable Energy Agency
(IRENA), based in Abu Dhabi, UAE. IRENA is an intergovernmental organisation
that supports countries in their transition to a sustainable energy future and
serves as a global centre of excellence in renewable energy technology, policy,
financing and knowledge. Renewable energy statistics are available from the
IRENA resource portal.