This week U.S. Senators Sherrod Brown (D-OH) and Charles Schumer (D-NY) launched a proposal aimed at reducing China’s hold on the global solar panel market. The proposal would bar Chinese-made solar panels from qualifying for the 30 percent tax credit that U.S. individuals and businesses receive for purchasing and installing solar panels. U.S. installations of solar panels has grown 70 percent per year since 2008, but the majority of these panels were manufactured in China.

The new legislation would reduce the scope of solar panels eligible for the existing 30 percent tax credit. To become eligible, 70 percent of the parts of the qualifying solar panel must be made in America. If the final point of manufacture is in the U.S, then only 50 percent of the parts would need to be American made.

“We can’t trade our dependence on foreign oil for a dependence on Chinese-made solar panels,” said Senator Brown. “We went from a solar trade surplus with China to a solar trade deficit in a matter of years. Ohio workers can compete with anyone in the world, but they deserve access to a level playing field. When the Chinese government provides direct export subsidies to its solar manufacturers, that’s not competing – it’s cheating. And it’s costing American jobs in solar manufacturing.”

“The American tax code should not make matters worse by encouraging the purchase of Chinese-made solar panels. Our plan will ensure that American tax incentives support American solar panel manufacturers,” added Brown.

Chinese companies, according to Brown and Schumer, have been able to take hold of the solar industry at a rapid rate, in part because they have taken large, government-subsidized loans from banks. This has led to plunging prices for U.S. wholesale solar panel makers. Today, prices are around $1 a watt of capacity today, down from $1.80 in January and $3.30 in 2008.