Before China came to dominate the solar panel industry, Germany led the way. It was the world’s largest producer of solar panels, with several start-ups clustered in the former East Germany, until about a decade ago when China ramped up production and undercut just about everyone on price.

Now as Germany and the rest of Europe try to reach ambitious goals to cut greenhouse gas emissions, the demand for solar panels has only increased.

Some of the last remaining manufacturers in Germany’s solar industry are not ready to give up.

They are demanding that the government in Berlin offer incentives to protect producers that have survived by catering to niche markets and expanding beyond making panels. They argue that Europe’s high standards for the origin of materials and shorter supply chains make production in Germany more environmentally friendly and reliable.

Not everyone is convinced protectionism is the way to go. Some critics note that the European Union’s tariffs on Chinese solar panels from 2013 to 2018 failed to save the domestic industry. Others argue that affordable, widely available solar panels are desperately needed regardless of their origin.

Because Europe relies “to a very important degree” on imported solar panels, any measure to restrict imports “needs to be weighed against the objectives we have set ourselves when it comes to the energy transition,” Mairead McGuinness, the European commissioner for financial stability, told the European Parliament last month.

But for European solar manufacturers, the problem has gotten worse in the past year. Not only have the Chinese increased their production of solar panels, but the United States tightened its tariffs to include Chinese panels shipped to Southeast Asian countries for final assembly. That has caused a flood of Chinese panels to reach Europe at below-market prices, government officials and company executives say, crushing any chance at fair competition.

Last year, more than 97 percent of the solar panels installed on roofs and in fields across Europe were made abroad, the vast majority in China, where cheap energy and government support keep prices low.

“Chinese competitors are currently giving away their products in unimaginable quantities in Europe at far below their own production costs,” said an open letter to the government written by Gunter Erfurt, the chief executive of Meyer Burger, a Swiss solar energy company that has two factories and a research center in Germany.

“We are fighting for fair market conditions, which have not existed for just under a year,” Mr. Erfurt wrote.

Mr. Erfurt’s appeal cited several other German companies involved in solar production that all want the government to help shore up the industry in the face of the fierce competition from China.

The German Solar Association is calling on the government to push through a proposed incentive, called a “resilience bonus,” that would pay solar panel owners a higher rate for electricity that is fed into the grid from domestically produced panels.

“While other countries such as the United States and China are strongly promoting the establishment and scaling up of solar gigafactories, the German government has yet to take concrete action,” the group warned in January.

To meet its ambitious climate goals, Germany needs to generate an additional 80 gigawatts of solar power annually. But last year, the country installed enough to generate just 9 gigawatts — and domestic photovoltaic companies say they have the capacity to produce only about 1 gigawatt of solar power per year.

That reality has led to a bitter dispute within the German solar industry, where some believe subsidies will do more harm than good.

Philipp Schröder, a former Tesla executive who runs 1Komma5, a solar company he co-founded, said it got its components mainly from Europe and the United States and successfully competed against low-cost Chinese panels by bundling panels with heat pumps, batteries and software to run the complete system. He is against any form of government support.

“The resilience bonus being discussed in Germany right now might be beneficial for a few profiteers in the short term, but in the medium term it acts like an addictive drug that suppresses innovation and fragments the E.U. market,” Mr. Schröder said in a post on LinkedIn.

This month, Meyer Burger deepened the dispute when it halted production at a facility in Freiberg in the eastern German state of Saxony and said it would shift the company’s focus to expanding production in Arizona and Colorado. There, it can take advantage of U.S. tariffs imposed on Chinese panels and incentives offered through the U.S. Inflation Reduction Act.

“Due to a lack of European protection against unfair competition from China, nearly four years of hard work by great employees in Europe is at risk,” the board of Sentis Capital Cell 3 PC, the largest shareholder in Meyer Burger, said in a statement. In a slap at German lawmakers, the board cited “strong bipartisan commitment” in Washington “to protect U.S.-based companies against unfair competition.”

Further stoking anger in the solar industry are the billions in subsidies that the government has pledged to attract other companies, including the battery producer Northvolt and the microchip manufacturers Intel and TSMC, as it appears stymied over the question of how to handle solar.

Sven Giegold, an under secretary in the Economy Ministry, told reporters this month that Germany would propose measures to help “support the local production of solar technology,” but quickly added: “Trade defense measures are not helpful.”

Germany has been here before. In the early 2000s, a combination of government incentives, scientific research and cutting-edge technology helped make its solar industry the world’s leading producer of photovoltaic panels and technology.

Then manufacturers from abroad, especially China, caught on and sold solar panels at prices well below what the Germans were offering. The impact was swift and brutal. Companies such as Q-Cells, Solon and SolarWorld declared bankruptcy and disappeared. But some businesses held on by focusing on assembling, installing and integrating solar panels in comprehensive green power systems.

Simone Tagliapietra, a senior fellow at Bruegel, the Brussels-based think tank, said he agreed that new tariffs would not make sense. To achieve a secure supply of panels, as well as support the green transition and economic growth, he suggested that Europe instead support development of new solar technologies.

“Go for the new generation of solar panels, products that are still at the forefront of innovation,” Mr. Tagliapietra said. “If we cannot beat the Chinese on quantity, we need to try to beat them on quality.”

Solarwatt, based in the former East Germany, said it might also have to close one of its solar panel plants. But making panels is only one part of the company; it also creates systems that connect the power generated by solar panels to wall boxes that can charge cars and heat pumps to warm homes.

“The future of our company is not a risk, even if production had to be shut down,” the company said in a statement, adding that other divisions could absorb the roughly 120 people whose jobs would be at stake.

Meyer Burger’s decision to shut its plant in Freiberg has left as many as 500 jobs in limbo. The company’s chief executive, Mr. Erfurt, said the factory’s future depended on political leaders in Berlin. “But we don’t see a bridge being built from the government at the moment,” he said.

At the same time, the company is contemplating other alternatives, he said, adding that “one option is simply to dismantle and rebuild it in U.S.”