Tensions between the United States and China were ratcheted up recently when the Obama administration said it would investigate complaints of unfair trade policies in China connected to renewable energy. But a controversial wind farm project in Texas could offer a model for greater cooperation. It is succeeding because the manufacturing of hundreds of wind turbines will be split between the two countries.
The 600-megawatt wind project was announced last year by investors in China and the United States. It will involve the construction of about 300 wind turbines and will draw on financing from both Chinese banks and from the 2009 U.S. Recovery Act.
Several U.S. senators cried foul about the project, complaining that most of the jobs it would create would be in China, where construction of the turbines would take place. The project became a rallying point for opposition to the stimulus bill, as the senators called for a freeze in spending until a new law could be passed requiring that all of the funded renewable energy projects use equipment manufactured in the United States.
Since then, tensions between the United States and China over energy projects have mounted, reaching a high point recently when the United Steelworkers union filed a formal complaint about government subsidies paid to Chinese energy companies and other policies that it said violated World Trade Organization agreements. Last month, the Obama administration agreed to investigate the complaint, the next step before the matter is officially brought before the WTO. The move drew an indignant response from Chinese officials, who asserted that Chinese subsidies were matched by subsidies provided by the U.S. government.
But even as the United Steelworkers union was formulating its complaint, it was working on an agreement that would clear the way for the proposed Texas wind farm to continue—an agreement that suggests how China and the United States can work together to help scale up renewable energy production and drive down costs.
The original plan called for all of the wind turbines to be manufactured in China, then shipped to the U.S. for installation. This setup would create thousands of jobs in China, and only a few hundred in the United States. While most of the financing for the project would come from China, the project leaders made it clear that the success of the project depended on help from the Recovery Act—with several reports suggesting that about 30 percent of the funding could come from stimulus grants.
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