Our Clean Energy Dollars Create Jobs Overseas As We Struggle To Catch Up

Sen. Charles Schumer has added to concerns that clean energy stimulus funding is creating wind energy jobs in China instead of the US, taking recent public interest as an opportunity to draw attention to the lack of controls favoring domestic employment. He's probably found, as many of us have, that mentioning China is one of the few ways to get people talking about trade issues. Though indeed, the total amount of wind energy stimulus funds going to Chinese companies is rather less than 4.4 percent, as this report on shares of wind energy stimulus funds shows.

A Spanish company has received 57 percent of the payouts to date, followed by Germany's 12.6 percent, Japan's 9.5 percent, and Portugal's 5 percent. So all together, companies in these four countries have taken in 84 percent of the wind energy stimulus funding disbursed to date. The largest US firm has received 12 percent, and all other companies besides have received around 4.4 percent of the stimulus grants.

It seems only fair to also explain that those companies often also employ people at their US subsidiaries and so may still be creating jobs in the US. This isn't in all cases a binary situation, so again, it seems the main reason that China gets singled out is because companies operating from China (often even when they're US-owned) tend to be even more committed to creating the bulk of jobs within China.

Though the plain fact, the main fact, is that the US-backed renewable energy sector is anemic. It's anemic largely because the US government has repeatedly nearly killed domestic investment in wind power by refusing to renew the production tax credits three times in the last decade, and partly because US financial institutions are more interested in playing silly buggers with derivatives and other wild betting schemes than getting involved with making real products.

The US government refused, for years, to even minimally support an industry that other industrialized nations strongly encouraged, and there's no point coming over all surprised that their industries are out-competing ours. Our goal now should be to copy their highly successful strategies by encouraging production and assembly of wind installation equipment close to where they're used, which is both supportive of the job market and good for the environment.

Further, this situation highlights the lunacy of the usual claims that the US is either far too protectionist or that our workers get wages and benefits that are too high to be competitive. Nonsense.

Our biggest competitors are Spain and Germany who, in addition to providing good wage and benefit guarantees to workers, also have far stronger environmental laws. While Chinese currency and labor practices have caused concern even among the European manufacturing giants, it's obviously possible to serve business, workers and the environment well and still be competitive in the wind industry. Indeed, US manufacturers are starting to prove this themselves, as Jesse Jenkins notes at that last link:

The good news for the U.S. is this: the share of foreign-manufactured turbine components used in U.S. wind farms has been falling - we imported 70% of components in 2005, compared to the 50% today. This improvement is due to the instatement in 2006 of a long-term production tax credit (PTC) that, thanks to subsequent extensions, will now remain in force through the end of 2012. And as our European competitors have shown, leadership in wind turbine manufacturing has far less to do with the price of labor than it does with sustained and effective public policy support. After all, EU labor prices hardly offer an inherent comparative advantage over the U.S., let alone over Chinese or Indian wind competitors.

That's a 20 percent improvement of market share in four years, mainly from the reinstatement of the production tax credit. Which means that this is a fairly easy fix: the US government needs to proactively support domestic industries and local jobs.

Is that really so hard? There's no need to pit the goal of increasing energy market share for renewable energy against creating domestic jobs, we are finally well on our way to doing both, a virtuous path that the Obama administration should be encouraged to redouble its commitment towards.

The main lesson the US needs to learn from our trade situation in China is that, whatever other faults can be laid at their feet, the Chinese government keeps providing jobs for its people first and foremost in its mind. They're rightly worried that public discontent in the face of shrinking opportunities for advancement could spell trouble for them, and they're acting rationally in response to that concern. The way to answer isn't to tell them to stop worrying about their people, but for the US government to start showing more concern for its people and demonstrating by example, as Europe has been, that there are better paths to progress than beggaring thy neighbors.

Views expressed on this page are those of the authors and not necessarily those of Campaign for America's Future or Institute for America's Future