U. S. Imports Equipment for Alternative Energy from China

Summary: Large numbers of wind turbines and solar panels are being imported from China, aided by its subsidies that push the legal limits of China’s membership in the World Trade Organization. In response, the U. S. should be encouraging our free market system to manufacture the components needed for alternative energy generation here at home.

Subsidized Industries in China are Exporting Alternative Energy Equipment to America. The New York Times reports (Sept. 10, 2010) that China is “emerging as a center of clean energy manufacturing. [It is] churning out solar panels for the American and European markets, developing new equipment to manufacture the panels and branching into turbines that generate electricity from wind. By contrast, clean energy companies in the United States and Europe are struggling.” The report notes that much of this development is subsidized by China’s governmental institutions. About 1 million Chinese workers are employed in these enterprises. The W. T. O. permits victimized nations to engage in various retaliatory measures.

As seen in the graph below, China supplies all its own market for solar panels, and is exporting a growing amount, year-by-year, to the U. S. and Germany, for example.

Production and exports of solar panels by China (The New York Times)

U. S. Energy Policy Lags Significantly Behind This Chinese Effort. In an accompanying article, The New York Times reported that some American alternative energy entrepreneurs have difficulties in obtaining federal grants or support, and likewise find it hard to secure private venture capital funding. The article points to one such person who wound up being courted by Chinese officials, and setting up a facility in China.

The U. S. has failed to implement a long-term policy for the development of alternative energy. Despite many efforts in Congress over the past decade, little progress has been made in passing a bill enshrining a comprehensive energy policy that might respond to our pressing problems of a) dependence on foreign sources for fossil fuels, b) the strong need to address global warming due to introduction of man-made greenhouse gases into the atmosphere, and c) a need to develop new industries and new employment opportunities domestically in this country. Title XVII of the Energy Policy Act of 2005 established a Loan Guarantee Program directed toward alternative energy research.

The American Recovery and Reinvestment Act of 2009 contains some temporary support, administered by the Department of Energy, for alternative energy development as an extension of the original Title XVII. [Disclaimer: As of this writing, I do not have thorough knowledge of either of these Acts.] Specifically, the Act temporarily provides loan guarantees for alternative energy development, new transmission capabilities, and biofuel research as an expansion of preexisting legislation in consonance with the objectives of the Act. The total funding amount for this guarantee program under the Act is just under $4 billion, which is in support of a total of $32-35 billion under the overall loan guarantee program (pp. 122-3 of the linked pdf document). As a loan guarantee program, the document outlines the several steps needed to secure a loan, in order to assure reasonable likelihood of success and loan repayment. As of June 2010, $2.3 billion in guarantees had been committed under the Recovery Act allocation.

Major Federal Support Is Needed To Develop Alternative Energy Delivery That Makes A Significant Contribution To U. S. Energy Needs. The U. S. urgently needs to achieve a significant degree of independence from fossil fuel-derived energy in its own right. Furthermore we need to recoup the significant lag that has developed with respect to other suppliers of alternative energy equipment in order to remain competitive globally in this growing industry. A high priority should be assigned to achieving these goals at the policy, legislative and budgetary levels.