Clean energy trade disputes miss the point
- 24 June 2011
Allison Hannon, Senior Finance Sector Manager, The Climate Group, comments on China’s recent announcement of wind turbine subsidies cuts - and how the clean energy industry will still continue to grow in both China and the US.
NEW YORK: China’s recent announcement that it will drop its subsidies and local content requirements for wind turbines in Section 301 of the Clean Energy Petition, is sure to please US manufacturing proponents and anger their Chinese counterparts - for about a week.
But once the dust has settled and both sides have taken full measure of the news, the clean energy situation will remain the same: the clean energy industry will continue to grow in both countries, and China will continue to have an advantage because they have a clear and stable energy policy.
The fact is that while trade disputes win political points, they are not necessary to create clean energy jobs in either country.
The clean energy sector has an increasingly global supply chain, where a given clean energy product or project is sourced in multiple countries, meaning that with clean energy, as with most issues between China and the US, simplistic assumptions do not apply.
To illustrate this point, research from Bloomberg New Energy Finance shows that wind turbines manufactured in China and installed in the US use American towers and foundations. This means that roughly one-third of the jobs created from the 'Chinese' turbines are created in the US.
The same holds true with solar panels. Research from Garten Rothkopf shows that a utility–scale solar PV plant installed in the US using Chinese panels creates about 10,000 direct jobs in the US at $15-41/hour, and about half as many direct jobs in China at $1.50-3/hour.
The reason is that most of the jobs created from clean energy projects (73%) are created in the country where the energy is generated, not where the technology is manufactured.
So while China has leapt to the forefront in clean energy technology manufacturing due to its clear and stable energy policy, this is not necessarily a bad thing for the US.
Chinese manufacturing makes clean energy technologies cheaper. In turn, this means more clean energy projects can be installed, and more clean energy jobs can be created, in the US.
If the US wants to compete with China on clean energy jobs (R&D, manufacturing, installation and operations jobs) it should pursue clear and stable energy policies that will enable domestic competitiveness not pursue trade disputes.
Disputes of this kind are not only a double edged sword (China is not the only country with local content rules), but they miss the point that growth in clean energy manufacturing leads to more industry and jobs in both countries.