12/24/2010

US goes after China for subsidizing Wind Power?

The complaints against the Chinese seems to focus on protectionism more than subsidies per se, but still it is pretty ironic that the Obama administration, which has given huge subsidies to wind power in the US, would complain about China's subsidies.

The U.S. said Wednesday it is requesting consultations with China at the World Trade Organization to end hundreds of millions of dollars of subsidies to boost wind-power production. . . .

China's Ministry of Commerce said Thursday that China is "highly concerned" about the U.S. invoking dispute settlement procedures at the WTO. China will study the U.S. request for talks and handle it in accordance with WTO rules on dispute settlement, while reserving China's "relevant rights," the ministry said without elaborating.

In the past, Chinese officials have called the union's complaints "groundless and irresponsible."

The U.S. says wind energy is the fastest-growing sector in China's renewable-energy market, which overall is expected to reach $100 billion by 2020. Chinese wind-turbine makers now rank among the top 10 producers globally, and foreign companies' share of the Chinese market has been slashed to 13% from 79% in the past five years, according to Goldman Sachs. . . .


Just one recent note on the subsidies to wind-power in the US.

Alas, market forces ruined the Pickens Plan. Mr. Pickens should have shorted wind. Instead, he went long and now he's stuck holding a slew of turbines he can't use because low natural gas prices have made wind energy uneconomic in the U.S., despite federal subsidies that amount to $6.44 for every 1 million British thermal units (BTUs) produced by wind turbines. . . .

. . . "The place where it works best is with natural gas at $7."

That may be true. But on the spot market natural gas now sells for about $4 per million BTUs. In other words, the free-market price for natural gas is about two-thirds of the subsidy given to wind. Yet wind energy still isn't competitive in the open market.

Despite wind's lousy economics, the lame duck Congress recently passed a one-year extension of the investment tax credit for renewable energy projects. That might save a few "green" jobs.

But at the same time that Congress was voting to continue the wind subsidies, Texas Comptroller Susan Combs reported that property tax breaks for wind projects in the Lone Star State cost nearly $1.6 million per job. That green job ripoff is happening in Texas, America's biggest natural gas producer. . . .

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