Sea Glass

Sea Glass

Wednesday, November 11, 2009

Chinese Wind Turbines

This is a great post by Tom Zeller, Jr. from the NYT. Should stimulus money be kept inside the US as much as possible? I believe so!

Senator Charles E. Schumer, the New York Democrat, is calling on the Obama administration to block the use of stimulus funds for a utility-scale wind farm in West Texas that would make use of turbines manufactured largely in China.
As Green Inc. reported last week, the $1.5 billion wind venture — announced by a coalition of American and Chinese companies — was planning to seek $450 million from funds set aside in the economic stimulus package for clean-energy development.
The rest of the financing would come from Chinese commercial banks, and the turbines themselves would be manufactured by A-Power Energy Generation Systems of Shenyang, China.
Citing an analysis by the Investigative Reporting Workshop at American University, which found that 84 percent of “green” stimulus funding has thus far gone to foreign companies building renewable energy projects in the United States, Mr. Schumer vowed in a telephone interview to introduce legislation if such funding isn’t reconsidered.
The stimulus money “is supposed to create jobs in America,” Mr. Schumer said. “We’re not saying every nut an every screw has to be made in America, but the majority of these manufacturing jobs should be located here.”
Mr. Schumer said he had sent a letter on Thursday to Energy Secretary Steven Chu, urging him to “reject any request for stimulus money unless the high-value components, including the wind turbines, are manufactured in the United States.”
Organizers of the project have estimated that more than 2,000 manufacturing jobs would be created in China as a result of the project, while a little over 300 would be created in Texas.
The purpose of the stimulus program, Mr. Schumer wrote in his letter, “was to jump start the economy to create and save jobs — American jobs.”
Walt Hornaday, the president of Austin-based Cielio Wind Power, the largest independently owned wind power developer in the United States and a partner in the Texas wind deal, said in a statement that the project would be unable to move forward without stimulus funding, and that it was vital to “engineers, contractors and suppliers who will see millions of dollars of work at a time when energy based jobs are difficult to find.”
“International partnerships are essential to the development of low cost renewable energy in America,” Mr. Hornaday added.
China’s reputation for blocking foreign access to its own burgeoning clean-energy sector has been fueling anger over the planned project in Texas.
China has vexed multinational corporations and American officials by imposing not just a 70 percent “local content” requirement for wind projects on its own turf, but by steering virtually all wind contracts issued by the national government to Chinese-owned companies, even when foreign companies meet the 70 percent requirement by opening factories in China.
It set even higher local-content requirements earlier this year for solar-power projects.
World Trade Organization rules allow governments to set high local-content thresholds for what are deemed demonstration projects, and China has labeled its solar projects in particular as such; with as few as 10 megawatts, they are tiny compared with the 600-megawatt and 1,200-megawatt coal-fired plants being built across the country.
The Chinese government has further shielded itself from challenge by never signing the trade organization’s agreement extending free-trade rules to government procurement. But this means that the United States government also does not have to follow W.T.O. rules in deciding whether to include Chinese companies in its own government spending programs, according to Alan Wolff, the chairman of international trade practice at Dewey & LeBoeuf, a Washington law firm.
“If this is government procurement, we don’t owe the Chinese anything” under the W.T.O. rules, said Mr. Wolff.
China did ease its local content requirements for wind turbines in a bilateral commitment to the United States government last week, when Chinese and American trade officials met in Hangzhou, China, as part of the U.S.-China Joint Commission on Commerce and Trade.
And China’s top economic planning agency, the National Development and Reform Commission, has moved to remove local-content regulations in the renewable energy sector and has concluded several deals to import equipment.
But Western renewable energy companies have remained skeptical that they will see much change given the way Chinese officials have mentioned in speeches for months the importance of raising the market share of Chinese-owned companies. And Western executives complain that the same Chinese officials continue to show preference for domestic companies when awarding contracts.
In response to complaints sent to us by readers, Cappy McGarr, a managing partner with the U.S. Renewable Energy Group, a private-equity company and a partner in the Texas wind deal, suggested in an e-mail message that the extended benefits to Texans — and to the wider American economy — were being overlooked.
“Many of the parts for the turbines will be made by General Electric, an American company,” Mr. McGarr said. “The people of Texas will directly benefit through major increases in tax revenue to support schools, fire departments and local governments. This wind farm will also generate millions of dollars in royalties for Texas landowners over the next 25 to 30 years.”

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