A quite fascinating read in the New York Times that is at the cross section of much of what is broken in America. We've often states this focus on green energy as a new dawn of jobs is a bit over the top, considering Germany is about 15 years ahead of the US in green tech and Japan about a decade. Even China is now revving ahead of us.... so how are we going to have a new wave of work in the US based on green energy again? [Aug 25, 2009: UK Telegraph - China Powers Ahead as it Seizes the Green Energy Crown from Europe] [Aug 28, 2008: China to Subsidize Wind Turbines] [Jun 19, 2009: Reuters - Incentives Add Shine to China's Solar Drive] As you can see, China for example (and Germany... and Japan) have heavily subsidized long range plans to go green, pretty much impossible to compete with on a global footprint if the home country refuses any similar form of subsidization.
However we are not allowed to have an industrial policy in the US because to do so would make us socialist - like those darn Germans. Instead we'll let much of our manufacturing rinse away to cheaper locales because well, that's just how it works. Except in Germany apparently. The statistic that caught my eye in this story was due to this lack of manufacturing capability 84% of the money thus far allocated for green is going to foreign companies.
The rest of the piece deals with a company we actually had a position in during pats of 2007 and 2008, A-Power Energy (APWR) and how they have won a contract to do wind energy ... in Texas.
- News last week of the first major influx of Chinese capital and wind turbine manufacturing expertise into the renewable energy market in the United States — a 600-megawatt wind farm planned for the plains of west Texas — had many readers of the Green Inc. blog in a state of agitation.
- The details of the deal known so far: Contingent on financing from Chinese commercial banks — and no small measure of funding from the U.S. economic stimulus package — A-Power Energy Generation Systems, a Nasdaq-listed company based in the Chinese industrial city of Shenyang, would provide 240 of its 2.5-megawatt wind turbines for a 36,000-acre, or 14,600-hectare, utility-scale wind farm in west Texas to be operated by Cielo Wind Power, a developer based in Austin.
- The total cost of the project, which was brokered in part by the U.S. Renewable Energy Group, an American private equity company, was estimated at $1.5 billion.
Here is where it gets tricky - as they say devil in details
- “This planned $1.5 billion investment in wind energy will spur tremendous growth in the renewable energy sector,” Mr. McGarr was quoted in a news release as saying, “and directly create hundreds of high-paying American jobs.” (rah! rah!)
- The devil, though — as many observers pointed out by the end of the week — is in the details. The group’s calculations last week put the number of American jobs at a little more than 300 — most of them temporary construction jobs, along with about 30 permanent positions once the wind farm is operating. Mr. McGarr told The Wall Street Journal that more than 2,000 Chinese jobs would be created by the deal.
- That, along with the fact that the project was hoping to secure 30 percent, or $450 million, of its financing from U.S. stimulus funds, was enough to send tempers flaring.
Boo Yah! American stimulus - creating 300 temporary jobs in America, and 30 real ones... and 2000 in China. Sort of symbolic really - considering the money for said stimulus was borrowed from China in the first place. But don't let reality get in the way of trumpets blaring about green tech and job creation!
Interesting reader comments:
- “I don’t understand why China is exporting wind energy to the U.S.,” wrote Mark from New York City. “Isn’t this exactly the kind of project a United States company could and should be doing?”
- Another reader — Drew from Boston — was more blunt: “Again, China is playing the West for a sucker,” he wrote. “We send them our engineering, they get the manufacturing work and experience.” (but that doesn't explain the success of Spain and Germany in renewable energy, Drew)
- “Why are U.S. stimulus funds being used to subsidize manufacturing jobs in China,” (because Americans won't do the work Germans will? Or is it Spaniards?) wrote a reader at Green Inc., who pointed out that American officials had repeatedly warned that the United States could lose its competitive edge on renewable energy manufacturing to China.
China obviously has no qualms with protectionism...Europeans have also complained strongly about this.
- As Keith Bradsher wrote earlier this year in The New York Times, by establishing prohibitive quotas for homegrown solar and wind turbine equipment, and disqualifying bids from foreign companies on dubious grounds, the Chinese leadership has muscled out American and European manufacturers of clean energy seeking to gain a foothold in China’s burgeoning market for renewables.