U.S. slaps heavy tariffs on competitors from China and Denmark
Forget taxes. Forget health care. Wind power is the latest issue to dominate the presidential campaign trail. Yesterday, Barack Obama and Mitt Romney traded pot shots on whether the wind power industry deserves government subsidies.
Speaking at a wind farm in Iowa, a state which generates almost 20% of its energy from wind, Obama praised the industry as a source of employment. “The wind industry now supports 7,000 jobs here in Iowa,” he said in comments carried by the Associated Press. “These are good jobs, and they’re a source of pride that we need to fight for.”
Meanwhile, at a rally deep in the heart of Appalachia’s coal country, his rival Mitt Romney plugged a different energy source: “We have 250 years of coal; why in the heck wouldn’t we use it? We’re going to take advantage of our energy resources . . . to create more jobs.”
Why the controversy?
Wind power is clean. It’s renewable. And it’s also getting cheaper, according to a new report published by the Department of Energy.
But the U.S. lags well behind other countries in propping up turbines.
China produces almost three times as many megawatts from wind as the U.S. And while wind provides a good deal of the total energy market in countries like Denmark (29 percent), Portugal (19 percent) and Spain (18.5 percent), America gets only three percent of its power from turbines.
That figure might go even lower as Congress debates whether to extend a $12 billion tax credit for the wind power industry that expires on December 31st. House Republicans are wary of alternative energy subsidies after a scandal last year involving the solar panel company Solyndra. And like Romney, many Republicans are skeptical that greenhouse gases play a significant role in causing climate change.
A Romney spokesman said his candidate favors ending the credit and creating “a level playing field on which all sources of energy can compete on their merits.”
But the subsidy is vital to keeping wind power competitive as it develops and becomes more efficient, argues Colorado Senator Mark Udall in a Denver Post op-ed.
Foreign competition threatens American suppliers
The Department of Energy report says lay-offs in the industry are likely if the tax credit is not extended. While it foresees strong growth for the rest of 2012, the report also predicts a “dramatically lower but uncertain 2013” because of competition from low natural gas prices and market uncertainty over the tax credit.
The world’s largest turbine maker, a Danish company called Vestas, has already announced plans to fire 20 percent of its workers at one of its four factories in Colorado.
Foreign companies like Vestas dominate turbine manufacturing in the U.S. In 2011, GE Wind claimed around 30 percent of the market, but outfits from Denmark, Germany, India, Japan and Spain controlled almost all of the rest.
Companies from China, South Korea and Vietnam supply many of the towers on which those turbines are placed.
To some degree, foreign suppliers do well because of substantial subsidies from their own governments. American officials believe Chinese companies are so over-subsidized that they have unfairly flooded the U.S. with cheap towers. The Commerce Department recently announced it would impose an “anti-dumping” tariff of 73 percent on tower imports from China, infuriating Chinese manufacturers and their government.
The U.S. has also enacted lesser tariffs of 26% against Vestas in Denmark. Denmark bet big on wind power in the 1970’s, making it the first country to do so, but their wind energy manufacturing has suffered from Chinese competition over the last decade. “The Danes let the Chinese destroy them from the bottom up,” says Mike Grandinetti, a professor at the Hult International Business School in Boston, in an interview with Latitude News. “They cannibalized the market with cheaper products.”
If the U.S. wants to avoid a similar fate, it must protect its nascent tower and turbine industry from foreign competitors without starting a trade war.
But wind power suffers from domestic threats as well, the Department of Energy report makes clear. While wind prices have fallen, natural gas is still the cheaper option. And wind doesn’t blow all the time. On windless days, coal and other fossil fuels must bridge the gap.
Germany ranks fourth in global wind production— it’s behind China, the U.S. and India. German Chancellor Angela Merkel boasted last year that Germany could be the world’s first industrialized country to run on the “electricity of the future.” But just this week its energy minister said his country would still require conventional power plants for “decades to come.”
Wind farms are also noisy and, some say, unsightly. In the wide-open Great Plains states, where most of America’s turbines are located, that’s not an issue. But in more densely populated areas like Cape Cod in Massachusetts, they can pose a bigger problem. Some residents there have reacted angrily to a 400-foot turbine in Falmouth.
“It’s a constant noise,” Chuck Eastman tells the Cape Cod Times . “Very hard to get out of your mind.”
The state shut down the project for being too loud.
If he really wants to live up to his campaign promises, maybe President Obama should install a mini-turbine on the White House roof like Britain’s David Cameron did on his private home.
Read the full Latitude News article.
Photo credit: David Suzuki