A "buy American" provision in new climate legislation could backfire.
Will senators crafting a new climate bill attach a “buy American” restriction to projects backed by the U.S. government?
A Bloomberg article contemplates that possibility this morning as the fallout from the $1.5 billion Texas wind farm, which will use Chinese wind turbines and may get stimulus dollars, continues.
The debate over local sourcing provisions, broadly speaking, pits industry and Obama administration officials against lawmakers who can’t be seen sending green stimulus money overseas while the unemployment rate hovers near 10 percent.
The head of General Electric’s power and water unit, Steve Bolze, says that protectionist measures could prompt other countries to retaliate and use fewer U.S. products.
And the Obama Administration is hoping to get U.S.-manufactured content in green energy projects up to 70-75 percent, about where the auto industry is.
Still, Sen. Sherrod Brown, D-Ohio, counters that a failure to address the manufacturing imbalance is tantamount to conceding the cleantech race to China.
Brown says,
We certainly can’t shoot ourselves in the foot by helping to finance Chinese clean-energy production.
The debate started in earnest when the U.S. Renewable Energy Group, a private-equity fund, and Cielo Wind Power, announced plans to build a 600-megawatt wind farm in Texas, using turbines from the Chinese A-Power Energy Generation Systems.
New York Democratic Sen. Charles Schumer sent a letter to Energy Secretary Steven Chu urging him to reject any requests for stimulus funds from the wind farm’s developers.
Schumer’s has pressed the point repeatedly in recent months.
Independent investigations have also found that more than 80 percent of stimulus money for wind projects have gone to foreign-based wind companies (a statistic that the American Wind Energy Association disputes).
A “local content” requirement for green energy equipment could solve the problem of Green Energy dollars flying overseas, as the province of Ontario has shown.
But Ontario has several carrots to go with the local content stick.
A generous feed-in tariff and a Renewable Energy Standard Offer Program (RESOP) which give renewable energy projects long term power purchase agreements have encouraged companies to flock to Ontario.
Without similar provisions, a “buy American” clause in the senate bill could well discourage investment in the sector.